Ongoing Due Diligence (ODD)

🔹 Definition

Ongoing Due Diligence (ODD) refers to the continuous monitoring and periodic re-assessment of a customer’s identity, risk profile, and transactional behavior after the initial onboarding process. It is a core component of a risk-based AML/CFT compliance framework, required by regulators worldwide to ensure that businesses maintain an up-to-date understanding of their clients and can detect suspicious changes or activity over time.

ODD is distinct from initial Customer Due Diligence (CDD)—it ensures that the customer relationship remains appropriate and lawful throughout its duration.

🔹 Frequently Asked Questions (FAQs)

Q1: What does Ongoing Due Diligence involve?

• Monitoring customer transactions to detect anomalies or suspicious patterns
• Updating customer information (e.g., beneficial owners, business activity, address)
• Reassessing the customer’s risk rating based on new data or behavior
• Screening against updated sanctions, PEP, and watchlists
• Triggering Enhanced Due Diligence (EDD) when red flags are detected

Q2: How often should ODD be performed?

• Frequency depends on the risk level of the customer:
  • Low-risk: every 2–3 years
  • Medium-risk: annually or bi-annually
  • High-risk: quarterly or real-time monitoring
• Additional reviews may be triggered by material changes in customer data or behavior

Q3: Why is ODD important?

• Ensures the firm remains compliant with AML/CFT regulations (e.g., FATF, EU AMLD, MAS AML Notices)
• Helps detect evolving risk that may not have been present during onboarding
• Protects against regulatory penalties, reputational damage, and criminal exposure
• Strengthens fraud prevention and improves overall customer risk management

Q4: What tools are used in ODD processes?

• Automated transaction monitoring systems with rule-based and AI alerts
• KYC remediation workflows for updating customer records
• Sanctions and watchlist screening platforms
• Media and adverse information monitoring (e.g., negative news screening)
• Risk scoring engines that adjust profiles based on new activity

Q5: What triggers an ODD event or review?

• Unusual or high-value transactions
• Changes in beneficial ownership or control structure
• New involvement in high-risk jurisdictions
• Customer appearing in adverse media or sanction lists
• Inactivity followed by a sudden surge in account activity