Counterparty VASP Due Diligence (CVDD): VASPs must conduct due diligence on counterparty VASPs (the VASP on the other side of a virtual asset transfer) BEFORE establishing a counterparty relationship + on an ongoing basis. CVDD elements include: (a) verification that the counterparty VASP is licensed / registered in its home jurisdiction; (b) assessment of the counterparty VASP's AML/CFT compliance programme + customer due diligence procedures + sanctions screening + record-keeping + STR-filing arrangements; (c) review of the counterparty VASP's beneficial ownership + governance; (d) review of the counterparty VASP's regulatory record (any sanctions + supervisory findings + enforcement actions); (e) risk-rating the counterparty + applying enhanced or simplified measures accordingly; (f) periodic review (typically annually or more frequently for higher-risk counterparties); (g) wind-down + exit procedure where the counterparty falls out of compliance.
The graph holds this control, the 0 it maps to, and the evidence behind each claim, over MCP and REST.