Do I Need Electronic Verification as well as obtain a Passport?
Identification of a individual client is a two way process. You first need to identify the client by obtaining a range of information such as their name, address and DOB etc. The second part is verifying this information through the use of reliable and independent sources. This evidence can take a number of forms and can be documentary (passport, driving licence), electronic (online client verifications) or a combination of both'.
How much evidence to ask for in order to be reasonably satisfied as to a clients identify is for the accountant to decide based on their risk-based identification and verification procedures.
The online verification tool which is available through AMLCC is provided by Equifax. This has been designed specifically to comply with the latest anti money-laundering legislation and does away with the need for documentation. Electronic resources are now considered an acceptable part of the client verification whereas this issue was not addressed in the previous guidance.
The data sets searched include, electoral roll, all bank accounts, credit cards, mortgages, loans etc (all shared with the financial services industry), CCJ's, IVA's & insolvencies, FTSE 350 shareholding, directors at home, PAF, deceased persons files, stolen passports lists, PEP and sanctions files, previous searches and more. They are fully equipped for the rigors of the ML Regs 2007 including risk assessment.
CV works by interrogating a wide range of independent positive and negative data sources to enable users to reach a decision instantly. An additional requirement of the MLR2007 is to check all clients identified as high risk against the Politically Exposed Persons register and other sanctions lists, this is done through the online verifications.
However the use of electronic verification only confirms the existence of a person, not that your client is that person. In accordance with the risk sensitive approach, for higher risk persons, you may wish to obtain additional verification evidence or remain alert to evidence that might suggest that they may not be who they say they are (i.e. they ask you to send the engagement letter or correspondence to another address).
In summary therefore for low risk clients you will be compliant with the verification requirements of the regulations if you carry out an online verification. For high risk clients you may also need to do additional checks. By carrying out an online verification check and say obtaining a copy of a passport and driving licence you are effectively carrying out identification evidence which would be required for 'high risk' clients. This 'belt and braces' approach would therefore ensure compliance for all clients irrespectively of their risk assessment.
However it should be stressed that the initial confirmation of the client's ID is only part of the Money Laundering Regulations 2007, there is a lot more required to comply with the Customer Due Diligence requirements.
Published July 2013