Which pillar focuses on understanding customers and assessing risk?

• A. Internal Controls
• B. Customer Due Diligence
• C. Training
• D. Independent Testing

Answer: (B)

Customer Due Diligence is all about knowing who you’re dealing with and judging the risk they pose. It involves identifying and validating the customer’s identity, understanding their business and ownership, and assessing the potential for money laundering or terrorist financing based on factors like geography, industry, and expected transactions. Depending on risk, some relationships get standard due diligence, while higher‑risk cases require Enhanced Due Diligence and closer ongoing monitoring. The other pillars support the program—Internal Controls shape the policies and governance, Training builds awareness and proper procedures, and Independent Testing checks that the program is working—but they don’t center on understanding customers and evaluating risk the way CDD does.