As a regulated entity, the verification of your clients is imperative in order to safeguard your business from becoming complicit with criminal activity such as money laundering or terrorist financing.
The introduction of the Money Laundering and Terrorist Financing (Amendments) Regulations 2019 (UK transposition of the EU’s 5th Directive) further reiterates the vital criteria of screening in relation to your due diligence procedures.
Before engaging in any business relationship with an individual or providing your services or products you must:
*when relevant you may have to identify the ultimate beneficial owner
In practice, this means you need to:
* for identifying an ultimate beneficial owner, you need to confidently establish the ownership structure of a company, partnership or trust. Once identified, you generally would carry out the same customer due diligence as prescribed above.
The due diligence process only ceases when you are confident that the individual poses no risk of money laundering. If adverse information is found, then even further investigation is required.
Moreover, it is also important to remember that identity verification is only one part of your CDD obligations.
The above processes can become bothersome and time consuming if carried out manually. Valuable time and resources can be wasted trying to cobber together the necessary documentation to validate an individual’s identity.
Moreover, relying on the naked eye to verify ID documentation, such as passports where forgery is common, is a risky strategy that can leave your business exposed to the wrath of crafty criminals.
As a sweeping generalisation, the purpose of CDD is simple in that you wish to confidently verify that an individual:
However, whilst these questions are simplistic their answers can become complicated in a world where over hundreds of billions of pounds are laundered each year.
Electronic verification tools can enable businesses to answer these key due diligence questions more swiftly & effectively. Businesses risk of money laundering exploitation and complicity dramatically decreases when the verification process encompasses checking client information against officially recognised databases.
You need to gain an appropriate level of assurance that the claimed identity is in fact the person with that identity.
Veriphy offers a wide range of electronic verification products. Learn more about our new identity verification app.
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