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GLOSSARY

Customer due diligence measures definition

Published by a LexisNexis Corporate Crime expert

What does Customer due diligence measures mean?

A relevant person is required to apply customer due diligence measures in accordance with the provisions of the money laundering Regulations 2007, SI 2007/2157, regs 7, 9–13, and to conduct ongoing monitoring of a business relationship; in some cases, a relevant person must apply enhanced customer due diligence and ongoing monitoring.

The Money Laundering Regulations 2007, SI 2007/2157, reg 5 defines 'customer due diligence measures' as:

(a) identifying the customer and verifying the customer's identity on the basis of documents, data or information obtained from a reliable and independent source;

(b) identifying, where there is a beneficial owner who is not the customer, the beneficial owner and taking adequate measures, on a risk-sensitive basis, to verify his identity so that the relevant person is satisfied that he knows who the beneficial owner is, including, in the case of a legal person, trust or similar legal arrangement, measures to understand the ownership and control structure of the person, trust or arrangement;

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Money laundering and terrorist financing national risk assessment—law firms

Money laundering and terrorist financing national risk assessment—law firms The UK’s third national risk assessment of money laundering and terrorist financing 2020 (NRA) sets out the key money laundering and terrorist financing risks for the UK and identifies how these have changed since the government’s last NRA was published in 2017. This Practice Note explains the background to the NRA, its key findings (particularly in relation to legal services) and what publication of the NRA means for you. Background The Money Laundering, Terrorist Financing and Transfer of Funds (Information on the Payer) Regulations 2017 (MLR 2017), SI 2017/692, as amended by the Money Laundering and Terrorist Financing (Amendment) Regulations 2019, SI 2019/1511 from 10 January 2020, require the Treasury and Home Office to make arrangements for a risk assessment to be undertaken to identify, assess, understand and mitigate the risks of money laundering and terrorist financing affecting the UK. The risk assessment must, among other things: • identify any areas where relevant persons should apply enhanced customer...

What do insolvency professionals need to know about the Economic Crime (Transparency and Enforcement) Act 2022?

What do insolvency professionals need to know about the Economic Crime (Transparency and Enforcement) Act 2022? The conflict in Ukraine acted as a catalyst for the Economic Crime (Transparency and Enforcement) Act 2022 (EC(TE)A 2022), which forms part of the UK government’s response to the conflict. The government fast-tracked the Bill through Parliament in March 2022, with the Bill passing all stages in five Parliamentary sitting days. The objective of EC(TE)A 2022 is to prevent the UK’s property market from being used to safeguard, conceal or launder the proceeds of crime and wealth and to enable greater transparency of the ultimate owners of properties and assets held in the UK. EC(TE)A 2022 is split into three key parts. Part 1 contains substantive new primary law providing for the registration of overseas entities. Part 2 amends existing proceeds of crime legislation providing for unexplained wealth orders. Part 3 amends the Policing and Crime Act 2017 to give effect to changes to the sanctions regime. EC(TE)A 2022, Pt 1 which introduces the...

Discover our 2 Practice Notes on Customer due diligence measures

Money laundering compliance officer—MLCO—job description and role profile

Money laundering compliance officer—MLCO—job description and role profile 1 MLCO details Name of organisation [Insert name] Name of MLCO [Insert name] Status of MLCO [Insert description that demonstrates board-level or equivalent status, eg Director and member of senior leadership team] Details of any other roles held within the organisation [Insert details of any other roles held, eg COO] Date appointed [Insert date] 2 Role summary To be the board-level (or equivalent) officer responsible for the organisation’s compliance with the Money Laundering, Terrorist Financing and Transfer of Funds (Information on the Payer) Regulations 2017 (MLR 2017), SI 2017/692 and to: 2.1 [be the main point of contact with the [insert name of relevant AML supervisor] on any matter relating to anti-money laundering (AML), counter-terrorist financing (CTF) and counter-proliferation financing;] 2.2 [take a leading role in dealing with the [insert name of relevant AML supervisor] on AML, CTF and counter-proliferation financing;] 2.3 take a leading role on AML, CTF and counter-proliferation financing issues within the senior management of...

Money Laundering Regulations 2017—nominated officer job description and role profile

Money Laundering Regulations 2017—nominated officer job description and role profile 1 Nominated officer details Name of organisation [Insert name] Name of nominated officer [Insert name] Reports to [Insert name] Full time/part time ☐ Full time☐ Part time Details of any other roles held within the organisation [Insert details] Date appointed by the organisation [Insert date] 2 Role summary 2.1 To act as the nominated officer appointed in accordance with the Money Laundering Regulations 2017 (MLR 2017) for [name of organisation]. 2.2 To receive and review internal suspicious activity reports (SARs) and determine whether they give rise to knowledge or suspicion (or reasonable grounds for knowledge or suspicion) that a person is engaged in money laundering, terrorist financing or proliferation financing. 2.3 To decide whether to report suspicious activity to the National Crime Agency (NCA), to make external SARs where necessary and be the main point of contact with the NCA. 2.4 To ensure systems and controls are in place to enable the organisation, including its managers and...

Dive into our 3 Precedents related to Customer due diligence measures

Company A and Company B are co-investors into ProjectCo. Is Company A required/entitled to carry out KYC checks on ProjectCo's directors nominated by Company B, and if so what information can Company A request?

Company A and Company B are co-investors into ProjectCo. Is Company A required/entitled to carry out KYC checks on ProjectCo's directors nominated by Company B, and if so what information can Company A request? ‘Relevant persons’ for the purpose of the Money Laundering Regulations 2007 (MLRs) The Money Laundering Regulations 2007, SI 2007/2157 (MLRs 2007) apply to the following legal or natural persons acting in the course of business carried on by them in the UK as defined in MLR 2007, SI 2007/2157, reg 3: • credit institutions • financial institutions • auditors, insolvency practitioners, external accountants and tax advisers • independent legal professionals • trust or company service providers • estate agents • high value dealers • casinos MLR 2007, SI 2007/2157, reg 4 outlines exclusions to the rule and discusses a range of persons and activities. It may also be useful to view Practice Note: Introduction to the UK AML/CTF legal and regulatory framework for financial services for further insight. Customer due diligence As required by...

What CDD checks should be applied to a pooled account?

What CDD checks should be applied to a pooled account? What is CDD? Customer due diligence (CDD) is a package of measures which credit institutions (such as banks), other financial institutions and other regulated entities are required to apply to their customers to ensure, as far as practicable, that the financial system is used only by bona fide persons for bona fide purposes. CDD is also known as know your customer (KYC). In the UK, CDD requirements are set out in the Money Laundering, Terrorist Financing and Transfer of Funds (Information on the Payer) Regulations 2017, SI 2017/692 (2017 MLRs), which implement the Fourth Money Laundering Directive (EU) 2015/849 (MLD4) and the Second Wire Transfer Regulation (EU) 2015/847 (WTR2) and entered into force on 26 June 2017. The 2017 MLRs replaced the Money Laundering Regulations 2007, SI 2007/2157 (2007 MLRs), which implemented the Third Money Laundering Directive 2005/60/EC (MLD3) in the UK. What is a pooled account? 2017 MLRs, SI 2017/692, reg 37(5) defines a pooled account...

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