ML 3.1 The duty

The purpose of this chapter is to ensure that relevant firms carry out the identification of clients. The chapter also 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 relevant firm has taken reasonable steps to check that client's identity. In this sourcebook "client" is defined differently from elsewhere in the Handbook and relevant firms should take care to ensure that they use the correct definition. There are special provisions in this chapter for cases where the person with whom the relevant firm has contact is acting for another. Broadly, the relevant firm has to enquire into the identity of both persons, unless a relevant exemption enables it to focus solely on the person it is actually in contact with.

"Transaction" in this sourcebook includes the giving of advice, and thus has a wide meaning throughout this sourcebook. Certain sorts of transaction are exempted from these requirements. These include cases where the transaction is of relatively small value or the person has been vouched for by another person who can be relied on to have carried out these checks himself. But the various exemptions from the requirement are all subject to the overriding condition that there is nothing in place to put the relevant firm on enquiry ("knowledge or suspicion") in the money laundering context.

The guidance in ML 3.1.5 G to ML 3.1.7 G aims to help relevant firms ensure that, where people cannot reasonably be expected to produce detailed evidence of identity, they are not denied access to financial services. Although a relevant firm must always take reasonable steps to check who its client is, relevant firms will sometimes be approached by clients who are at a disadvantage, or who otherwise cannot reasonably be expected to produce detailed evidence that helps to confirm identity. An example could be where a person does not have a passport or driving licence, and whose name does not appear on utility bills.

If a relevant firm has reasonable grounds to conclude that an individual client is not able to produce detailed evidence of his identity and cannot reasonably be expected to do so, the relevant firm may accept as identification evidence a letter or statement from a person in a position of responsibility who knows the client that tends to show that the client is who he says he is, and to confirm his permanent address if he has one.

Examples of persons in a position of responsibility include solicitors, doctors, ministers of religion, teachers, hostel managers and social workers.