Topic starter
24/10/2026 8:49 pm
TL;DR: Many firms had CDD, EDD and monitoring policies on paper but failed at execution, documentation and oversight, especially around trigger-based reviews, tailored EDD and approval controls, according to Alloy’s analysis of the FCA’s April 2026 multi-firm review. The gap is governance, not intent: if casework, audit trails and delegation are weak, customer due diligence becomes performative.
Editorial analysis by NHI Mgmt Group, based on content published by Alloy: “The FCA's CDD review: Good intentions aren't enough”.
Key questions
Q: What breaks when customer due diligence is too weak in non face to face business relationships?
A: Weak due diligence creates gaps in identity assurance, recordkeeping, and fraud detection.
Q: Why do trigger-based reviews matter in ongoing customer monitoring?
A: Because customer risk changes outside the calendar.
Q: What are the most common failure signals in EDD documentation?
A: The biggest signal is when analysts can describe why they escalated a case but cannot prove it in the file.
Practitioner guidance
- Define the CDD-to-EDD decision boundary Write explicit criteria for when baseline customer due diligence ends and enhanced due diligence begins, then test those criteria against real cases so analysts do not improvise the escalation path.
- Operationalise trigger-based reviews Link ownership changes, director changes, name changes and similar events to the case workflow so a triggered review updates the record, resets due dates where appropriate and leaves a clear audit trail.
- Capture EDD rationale in the case record Require analysts to record the risk factor, the evidence reviewed, the decision made and the approver before a file can close, rather than relying on memory or email.
Bottom line: The FCA’s review shows that customer due diligence often fails because firms cannot execute or evidence their own controls consistently.
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