Client Due Diligence (CDD) and the Role of Notarization

Client Due Diligence (CDD) is a legal and regulatory obligation for companies across financial services, legal, corporate, and real estate sectors. As regulatory frameworks continue to expand and evolve, businesses face increasing pressure to implement robust procedures for verifying client identities and ensuring transparency. This article explores the fundamentals of CDD, the circumstances under which notarization becomes relevant, and how Legitify’s online notarization solution simplifies the process.

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What Is Client Due Diligence (CDD)?

Client Due Diligence refers to the process of identifying and verifying the identity of a customer or business partner. It forms the foundation of Know Your Customer (KYC) and Anti-Money Laundering (AML) protocols and is required at the start of a business relationship, during high-risk transactions, or when unusual activity patterns are detected.

CDD serves several key purposes:

• Preventing money laundering, terrorist financing, and other forms of financial crime
• Verifying that clients are who they claim to be
• Understanding the nature and intended purpose of the business relationship
• Assessing the level of risk posed by a client
• Ensuring ongoing monitoring and compliance with local and international regulations

Regulators worldwide mandate that businesses collect, verify, and retain specific data about clients, including identity documentation, beneficial ownership information, and proof of source of funds.

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CDD Requirements

While specific regulations may differ by jurisdiction, the core principles of Client Due Diligence remain consistent globally. Regulatory frameworks universally require businesses to implement risk-based due diligence measures designed to verify client identities and assess potential risks related to money laundering and terrorist financing.

Key elements of the CDD process include:

• Customer identification and verification
• Identification of beneficial owners
• Risk assessment and client profiling
• Ongoing monitoring of transactions
• Retention of records and documentation

These requirements form the foundation of compliance with anti-money laundering (AML) and counter-terrorism financing (CTF) laws worldwide, ensuring businesses maintain transparency and integrity in their client relationships.

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The Role of Notarization in Client Due Diligence

Notarization plays a vital role in enhancing the credibility and legal validity of client-provided documentation. This is especially relevant in cross-border contexts or when dealing with high-risk clients.

Common use cases for notarization in CDD include:

• Certified Copies of Identity Documents: When clients cannot be met face-to-face, notarized copies of identification documents are often required to ensure the authenticity of scanned or digital submissions.
• Verification of Corporate Documents: Institutions may request notarized versions of certificates of incorporation, articles of association, shareholder registers, and board resolutions to confirm the legitimacy of a business entity.
• Ultimate Beneficial Ownership (UBO) Declarations: Notarized declarations of beneficial ownership offer greater legal weight and are frequently requested by compliance departments, especially for complex or foreign ownership structures.
• Source of Funds Statements or Affidavits: A notarized affidavit regarding the source of funds provides an additional layer of assurance in high-value or high-risk transactions.
• Due Diligence by Notaries Themselves: In many civil law jurisdictions, notaries are legally obligated to perform their own CDD, particularly in real estate transactions, business formation, and contract execution. This includes verifying identities, reviewing financial information, and reporting suspicious activity.

Notarization serves to formalize and authenticate key components of the due diligence process, particularly when working with foreign clients or dealing with sensitive legal matters.

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Challenges of Traditional Notarization in CDD Workflows

Although notarization is essential, traditional processes often create challenges that slow down compliance.

• Geographical limitations: Clients must physically visit a notary, which complicates cross-border scenarios
• Time-consuming logistics: Scheduling appointments, couriering documents, and coordinating across time zones causes delays

For businesses managing high volumes of clients, especially internationally, traditional notarization can slow onboarding and increase compliance risk due to manual handling.

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How Legitify Modernizes Notarization for CDD

Legitify’s secure online notarization platform transforms notarization into a digital-first process, removing the friction of in-person procedures and enabling a smooth notarization workflow. Here is how Legitify simplifies CDD:

• Integrated Identity Verification:Through integrations with trusted providers, Legitify performs robust identity checks during account setup, ensuring all parties are verified before any notarization session can proceed.
• Online Notarization: Clients can upload documents and meet with a licensed notary via a secure, recorded video session. This eliminates travel requirements and ensures a seamless experience regardless of location.
• Global Accessibility and Standardization: Legitify ensures that notarizations comply with legal requirements and regulations, making them valid and reliable for businesses operating internationally.
• Apostille Services: For cross-border use, Legitify enables users to request apostille services, simplifying international document legalization without additional bureaucracy.
  
  

As regulatory scrutiny of client onboarding intensifies, businesses must ensure that their CDD procedures are not only thorough but also efficient and secure. Notarization strengthens the integrity of identity verification and document authentication, particularly in cross-border and high-risk scenarios.

Traditional notarization is often incompatible with modern business needs. Legitify offers a compliant, scalable solution, allowing companies to complete notarization remotely, with full auditability and legal assurance.

By integrating online notarization into the CDD workflow, businesses can reduce delays, cut administrative costs, and ensure robust due diligence aligned with international standards.

Looking to enhance your compliance workflows with secure online notarization? Discover how Legitify can support your business at www.legitify.eu.