Commentary

A7.117 Identification procedures

Administration and compliance

A7.117 Identification procedures

A7.117 Identification procedures

For the latest New Developments, see ND.1295, ND.1775, ND.1384, ND.1947.

In the UK it is now an absolute requirement for 'relevant persons' (see A7.115) to be entirely clear that neither the source nor the destination of funds involves money laundering activity. General requirements for customer due diligence, previously known as 'KYC' (know your customer), play an important part in this process. The Fourth Anti-Money Laundering Directive sets out a detailed code of customer due diligence requirements in its Chapter 2 (articles 10-29), the basis of the 2017 Regulations.

The regulations1 provide that customer due diligence measures shall comprise the following:

  1.  

    •     identifying the customer unless the identity of that customer is known to, and has already been verified by, the 'relevant person'

  2.  

    •     verifying the customer's identity unless the customer's identity has already been verified by the relevant person and

  3.  

    •     assessing, and where appropriate obtaining information on, the purpose and intended nature of the business relationship or occasional transaction

The second of these requirements can be burdensome. Where an engagement is with a company, additional information must also be verified, including the company's name, its registration number and the address of its registered office, and if different, its principal place of business. Unless the company is listed on a regulated market, the relevant person is also obliged to verify the law to which the company is subject, its constitution, the full names of the board of directors (or, if there is no board, the members of the equivalent management

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