Karsten Wenzlaff, Advisor
August 26th, 2025
Karsten Wenzlaff is a Crowdfunding and Fintech Expert from Germany. He is Secretary-General of Digit[...]
Customer Due Diligence Controls For Fintechs
May 13, 2026 | NCFA Resource | Risk Compliance And Regtech, Digital Identity Privacy KYC AML ATF
Practical Customer Due Diligence Guidance For Fintech Teams
On April 8, 2026, the UK FCA published customer due diligence (CDD) findings from a multi firm review. The review covers practical weaknesses that matter to fintech teams, including thin policies, unclear review cycles, weak evidence records, poor senior approval steps, and audit gaps.
This is a UK resource, but the operating lessons travel well. Canadian fintechs still need local legal and compliance advice, including FINTRAC obligations where applicable. The FCA shows where customer checks break down when firms grow, add automation, rely on vendors, or treat onboarding as a sales funnel instead of a risk control.
What It Does In Practice
The FCA review gives compliance and product teams a useful checklist for testing how customer due diligence works inside the business. It doesn't just ask whether a policy exists. It looks at whether staff know what to collect, when to escalate, how to record decisions, and how often files need review.
Stronger firms clearly separate standard CDD from enhanced due diligence (EDD) for higher risk customers. They define when senior approval is needed. They document EDD steps, keep review cycles clear, and test whether onboarding files support the risk decision made at the time.
See: AI Agents Enter Governed Financial Workflows
The weaker examples are just as useful. The FCA points to firms that could not show what extra checks were completed for high risk customers, did not record key information about the purpose of a business relationship, lacked clear review schedules, or used the same people to onboard customers and review their own work.
For fintechs, fast onboarding can become a liability when the business cannot prove why a customer passed, why a file received extra review, or who approved a higher risk relationship. Policies are no longer enough, as teams need evidence.
Who Gets Value
This resource is useful for fintech founders, compliance leads, money laundering reporting officers (MLROs), onboarding teams, product managers, payments companies, lending platforms, crypto firms, crowdfunding portals, regtech providers, and financial institutions reviewing digital account opening.
It is especially relevant for firms that use automated onboarding, AI assisted reviews, third party identity vendors, risk scoring tools, or outsourced compliance support. Those tools can improve speed, but companies still needs clear accountability, review rules, exception handling, and audit trails.
Strengths And Limits
The strength of this resource is its practical format. It shows good and poor practice side by side. That makes it easier for a fintech team to compare the report against its own onboarding journey, file review process, vendor controls, and board reporting.
See: NCFA Fintech Whisperer | Weekly Fintech Intelligence
The review also makes a simple point that many growing firms miss. Regulators want to see how decisions happen in real life. A clean policy document doesn't help much if customer files are thin, staff guidance is vague, or senior approval only exists in theory.
The limit is geography. The FCA findings reflect UK regulation and UK supervisory expectations. Canadian firms shouldn't treat this as Canadian legal guidance. They should use it as a practical benchmark, then test their own controls against Canadian requirements, sector rules, and legal advice.
Key Resources
FCA Customer Due Diligence Findings (primary FCA resource with good and poor practice examples)
FCA Risk Assessment Controls Findings (companion FCA review on customer and business risk assessments)
FCA 2025 To 2030 Strategy (broader strategy context for financial crime supervision)
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