CRED 12.3 Identification of the client

ML 3.1.1 G - ML 3.1.9 R establish a duty on relevant firms to carry out the identification of clients. ML 3.1.3 R makes clear that relevant firms must not, in general, carry out relevant regulated activities, or agree to do so, for a client or potential client unless the firm has taken reasonable steps to check that client's identity. That requirement applies to any person engaged in, or who has had contact with the firm with a view to engaging in, any transaction with that firm:

1. (1)

   on his own behalf; or

2. (2)

   as agent for or on behalf of another.

In the case of (2), the firm has to enquire into the identity of both persons, unless an exception enables it to focus solely on the person it is actually in contact with.

In the credit union context, in order to ensure that the person is who they say they are, the following information should be obtained:

1. (1)

   a true name and name used;

2. (2)

   correct permanent address, including postal code; and

3. (3)

   date of birth.

Ideally, the true name or names used should be verified by reference to a document obtained from a reputable source which bears a photograph. There is obviously a wide range of other documents that members might produce as evidence of their identity. It is for each credit union to decide the appropriateness of such documents in the light of other security procedures operated when an account is opened.

In addition to the name verification, it is important that the current permanent address should also be verified. Some means of verifying address are:

1. (1)

   checking the voters' roll; or

2. (2)

   making a credit reference agency search; or

3. (3)

   requesting sight of a recent utility bill, local authority tax bill, bank or building society statement (originals); or

4. (4)

   checking a local telephone directory (not as a primary check).

ML 3.1.5 G - ML 3.1.7 G recognise that there will be exceptional circumstances when the potential member is unable to produce the normal documents to confirm their identity. In these circumstances a credit union can accept a letter from persons in a position of responsibility such as teachers, social workers, doctors, ministers of religion, hostel managers and solicitors as evidence of identity. The credit union still has the responsibility to satisfy itself that the person applying for membership is who they say they are (ML 3.1.3 R).

ML 3.2 sets out a number of exceptions to the requirement upon firms to establish the identity of the client. These exceptions apply in principle to credit unions. However, none of these exceptions applies if the firm has reasonable cause to know or suspect that the client is engaged in money laundering.1