The JMLSG (5.3.24 2007) state that for ML purposes “The identity of an individual has a number of aspects: e.g., his/her given name (which of course may change), date of birth, place of birth. Other facts about an individual accumulate over time (the so-called electronic “footprint”): e.g., family circumstances and addresses, employment and business career, contacts with the authorities or with other financial sector firms, physical appearance.”This is where you determine who it is you are dealing with, and who it is you needed to verify. It is also just the start of the KYC process. Identification can be done in numerous ways, but it is basically the concept of the client identifying himself to the firm. Some examples are:
- By application form
- By the client simply saying ‘I am John Smith from such and such’
- By producing a document such as a passport
From the above JMLSG statement we can surmise that if we obtain a potential clients full name, place and date of birth we have fulfilled the minimum requirements for client identification. If we wanted to verify this information by for example by documentation, two documents fulfil the criteria. There is the UK Passport and the UK Photographic driving licence, both issued by Government departments and with bonus of photographic evidence to add weight to the verification.
The key word in the JMLSG statement is ‘time’. The basic criteria of identity are quickly established however it does not suffice in all client situations. Background enquiry of the client is essential in any client account opening situations. In our enquiries we should ask ‘how long?’ often. For example, how long have you lived at your current address? Or how long have you been self employed. Who is your banker? Who is your solicitor? Documents can be forged or stolen and only provide a snap snot of a single moment. Obtaining a previous address of a client who has only lived at their current address less than 12 months, for example, bridges the gap in time for knowing your client purposes. Robust and enough KYC data consummate to your risk which covers time can give you the extra confidence in not only concerning the identity of a client but help you to understand and effectively mitigate your risks of money laundering that client may pose to your firm.