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Legal Framework

Most countries have adopted Anti-Money Laundering legislation and regulations to ensure that organisations which handle client money and/or advise on financial transactions have in place procedures to ‘Know Your Customer’ and to undertake ‘Customer Due Diligence’ (‘CDD’).

In the UK for example; most if not all of the financial services firms with whom you deal will need to be compliant with, inter alia, Proceeds of Crime Act 2002, Terrorism Act 2000 and Money Laundering Regulations 2007. One of the key elements of this is CDD.

Regulation 5 says that CDD comprises

  • Identifying the client and verifying their identity on the basis of documents, data or information obtained from a reliable and independent source.
  • Identifying, (where there is a beneficial owner who is not the client), the beneficial owner and taking adequate measures, on a risk-sensitive basis, to verify his identity so that you are satisfied that you know who the beneficial owner is. This includes understanding the ownership and control structure of a legal person, trust or similar arrangement.
  • Obtaining information on the purpose and intended nature of the business relationship.

Identification and verification

Identification of a client or a beneficial owner is simply being told or coming to know a client’s identifying details, such as their name and address.

Verification is obtaining some evidence which supports this claim of identity.

Verification Systems will verify your personal information and provide information to your financial services provider, solicitor, accountant, etc. to the standard required by the Regulations.