The Money Laundering Regulations stipulate that in the majority of cases, a relevant (i.e. registered) person “must verify the identity of a customer before the establishment of a business relationship or carrying out an occasional transaction.”
The regulations don’t stipulate the specific information and documents that need to be obtained although comprehensive guidance is provided by the Joint Money Laundering Steering Group. In addition, in accordance with the Money Laundering Regulations, the latest JMLSG guidance does not stipulate th...
Shortened demo course. See details at foot of page.
...ified, it can be done using:
Recent utility bill or certificate from a supplier of utilities confirming the arrangement to pay for services on pre-payment terms
Local authority tax bill (valid for the current year)
Bank/building society or credit union passbook with current address
Local council rent card or tenancy agreement
If an individual client is not able to produce evidence of his/her identity then a responsible person such as a solicitor, doctor etc who knows the client can confirm their identity and permanent address if they have one
Companies can be popular vehicles for money laundering as complex arrangements can sometimes make it difficult to tell who owns them. As a result, care should be taken when verifying them. Steps to check that ...
Shortened demo course. See details at foot of page.
...ion service; OR
An undertaking from a firm of lawyers or accountants confirming the documents have been submitted to the relevant registry
Identification of those with 25% or more controlling interest
A central register of charities is held by the Charity...
Shortened demo course. See details at foot of page.
...o ensure that at least one signatory has been verified.
Verify the purpose of the club or society and an address. Follow similar procedures as registered charities for checks ...
Shortened demo course. See details at foot of page.
...se of the club or society and an address. Follow similar procedures as registered charities for checks on signatories..
The Joint Money Laundering Steering Group (JMLSG) is an organisation made up of a number of trade associations from the Financial Services industry, these include:
The Association of British Insurers (ABI)
British Bankers Association (BBA)
Building Societies Association (BSA)
Council of Mortgage Lenders (CML)
Personal Investment Ma...
Shortened demo course. See details at foot of page.
...e client is remote and original documentation cannot easily be obtained then the use of electronic identification is much more robust. Alternatively the firm would need to use an arrangement whereby the client takes the documents to be verified by an approved third party. Using email and scanned copies may not be satisfactory in managing risk.
This is required in a defined list of situations summarised as follows:
High-risk of money laundering or terrorist funding
High-risk country of residence or connections with such
Politically exposes persons, their family members or close associates
Any case where fraudulent, false or stolen identity documents are produced
Complex, unusual or seemingly pointless transaction requests
As a minimum EDD consis...
Shortened demo course. See details at foot of page.
...ominee shareholders, shadow directors or formation of companies in third countries (the UK might be one of these soon!)
Geographic
Countries without credible anti-money laundering regimes
Countries where there is a significant level of corruption
Countries subject of EU or UN sanctions
Countries where there is known funding or support for terrorists
Countries where terrorist organisations are located
Politically Exposed Persons are:
Heads of state
Government ministers and their deputies or assistants
Members of Parliament (or equivalent)
Regional MPs (not...
Shortened demo course. See details at foot of page.
...iblings should also be considered.
Close associates are defined as any people having joint interests, for example common directorships or beneficiary arrangements.
It helps to understand the factors that create higher risk as they may also apply to people who are not PEP, there factors are: <...
Shortened demo course. See details at foot of page.
...products and services are also lower risk than others. The objective is not to deny straightforward products and services to PEP.
The FCA has stated that the FOS & FSCS will still apply to a PEP and offer guidance for dealing with PEP in FG 17/6.
Firms should undertake the following when confronted with PEP:
Take appropriate measures
Review on a case by case basis
Be proportionate about who is a PEP
Recognise that the same type of risk...
Shortened demo course. See details at foot of page.
...re should be taken around the beneficiaries of any long-term insurance products particularly, before proceeding to place cover.
Note that the practise of getting prospects and clients to sign a PEP disclaimer does not fully address the issue and should not be relied upon. For most firms this might be considered unnecessary.
