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:
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:
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