KYC and AML checks
Discussion
Everywhere I turn I seem to run into having to produce my ID. In quick recent succession, retail bank, solicitor and corporate finance firm.
I'm just intrigued as to how far and wide the law reaches to make these a necessity. Anyone have any knowledge on the subject?
Is the requirement for them growing?
Will the greengrocer need to do them next?
Is there a way to do it once and for all that can be produced in demand without the tedium of having to keep appearing in person?
Cheers
Bert
I'm just intrigued as to how far and wide the law reaches to make these a necessity. Anyone have any knowledge on the subject?
Is the requirement for them growing?
Will the greengrocer need to do them next?
Is there a way to do it once and for all that can be produced in demand without the tedium of having to keep appearing in person?
Cheers
Bert
The requirements are increasing. KYC (now called Customer Due Diligence) is predominately within the Money Laundering Regs, of which the latest version came into force in June 17.
Unfortunately there isn’t a 1 size fits all approach. Firms are required to carry out KYC using a risk based approach. As a result every firm’s policy and procedures are going to vary - one firm may accept a passport copy and a bill, whereas another may need a certified copy of these. If you care to understand more, have a look at the Part 1 Guidance issued by JMLSG.
The recent and ever increasing size of fines ensures that firms keep AML at the top of their agenda. Look at William Hill last month...and HMRC are actively visiting estate agents and issuing fines but not naming names yet.
Unfortunately there isn’t a 1 size fits all approach. Firms are required to carry out KYC using a risk based approach. As a result every firm’s policy and procedures are going to vary - one firm may accept a passport copy and a bill, whereas another may need a certified copy of these. If you care to understand more, have a look at the Part 1 Guidance issued by JMLSG.
The recent and ever increasing size of fines ensures that firms keep AML at the top of their agenda. Look at William Hill last month...and HMRC are actively visiting estate agents and issuing fines but not naming names yet.
It’s coming from the unthinkable amount of money which the UK either launders or funds terrorism with.
The NCA published a national risk assessment in October which barely scrapes the surface of the issue.
KYC should go much further than just verifying a customers identity and isn’t just a checkbox to complete.
The NCA published a national risk assessment in October which barely scrapes the surface of the issue.
KYC should go much further than just verifying a customers identity and isn’t just a checkbox to complete.
BertBert said:
WTF does AMLAT stand for?
So where is all this coming from?
Can't we just have photo id cards to do the job?
Anti Money Laundering and Terrorism checks. So where is all this coming from?
Can't we just have photo id cards to do the job?
As above, one solution doesn't fit all circumstances or industries, but after a number of high profile incidents using rental vehicles, there is a lot of work going on behind the scenes to improve customer screening and risk management.
BertBert said:
I guess my other question is whether it actually addresses the problem. Or whether it just makes people like me who are barely able to launder their underwear let alone wash money, jump through ever increasing hoops for no purpose?
Now this is a good point. In my opinion, all verifying someone’s identity does is ensuring that you know who you are dealing with.But that should be just the first point of the due diligence process. Depending on the nature of the relationship and the transactions which take place further, targeted due diligence should be carried out on a basis which is proportionate to the risks the firm has identified.
I agree, it can seem onerous for the normal law abiding citizen. However money laundering doesn’t just benefit the criminal and allow them to spend the proceeds of their crimes, it is also to the detriment of the economy and is ethically wrong.
The Criminal Finances Act recently introduced something called Unexplained Wealth Orders, and I’ve heard that as a result of this being introduced an overseas politician has been asked to prove how he has acquired £22m of UK property. Someone along the line more than likely failed to carry out enough KYC.
cv3hd said:
I agree, it can seem onerous for the normal law abiding citizen.
Thanks for your answer. But I need to take issue just a tiny bit 
Not it can seem onerous. It actually is onerous! That I know. What I suspect, but don't know is that it makes no meaningful difference to the real problem. Someone gaining £22m of assets is going to be quite happy to spend a tiny amount of that falsifying a passport and a utility bill!
I'm probably just a GoG, but it's all s
te. Spend an hour answering the many different variants of 'are you sure this is the right product for you that meets your needs' to open a bank account.Taking half a day off work to visit the solicitor to do an id check for 1.5 pages of tenants in common deed. Having to pay the same solicitor £100 to visit my housebound mum for the same. Heavens only knows what strictures GDPR will bring! Will they solve the problem? I doubt it.
Hey ho! I'll just drink my beer and look forward to the next race season (PH content) until the insurance nonsense kills that!
Cheers!
Bert
https://youtu.be/SpvSuAP5la0
We have to do KYC on every piece of land we buy. I had to walk away from 2 deals last year where the funder (huge pension fund), was uncomfortable with the findings.
It irrates a lot of land owners, especially those who own the land through intermeshed corporate structures, be it a couple of iffy market traders or a major PLC.
It irrates a lot of land owners, especially those who own the land through intermeshed corporate structures, be it a couple of iffy market traders or a major PLC.
Funnily enough, in Italy, setting up a bank account or buying a house is the easy bit and seems quite light touch in terms of KYC.
It is operating the accounts that seems problematic. I suspect it is driven more by a crackdown on tax evasion than chasing drug barons.
A couple of days ago, I had to pay a €808 bill for a geological report here in Italy. I don't have my card reader on me, so paying promptly by electronic means was out of the question.
However, rocking up to the geologist's own bank branch to pay cash into his account unleashed the most ridiculous amount of bureaucracy, requiring me to explain the source of funds, the reason why I wanted pay cash, I had to show a passport and give my codice fiscale to the teller, all for a relatively modest amount of money being paid against a VAT invoice of one the bank's own clients, and presumably not out of line with most of the transactions in that account. What could have taken two minutes in the UK took the best part of half an hour.
On the other hand, I can turn up at the Post Office here with a wheelbarrow full of cash to pay bills and nobody would bat an eyelid.
The next time I'll give the supplier cash and leave him to sort out the paperwork
. Which is, I guess, what the authorities here don't want to happen.
I'd rather go through the KYC hoops in some detail once to avoid similar hoohahs every time I had to conduct a transaction.
It is operating the accounts that seems problematic. I suspect it is driven more by a crackdown on tax evasion than chasing drug barons.
A couple of days ago, I had to pay a €808 bill for a geological report here in Italy. I don't have my card reader on me, so paying promptly by electronic means was out of the question.
However, rocking up to the geologist's own bank branch to pay cash into his account unleashed the most ridiculous amount of bureaucracy, requiring me to explain the source of funds, the reason why I wanted pay cash, I had to show a passport and give my codice fiscale to the teller, all for a relatively modest amount of money being paid against a VAT invoice of one the bank's own clients, and presumably not out of line with most of the transactions in that account. What could have taken two minutes in the UK took the best part of half an hour.
On the other hand, I can turn up at the Post Office here with a wheelbarrow full of cash to pay bills and nobody would bat an eyelid.
The next time I'll give the supplier cash and leave him to sort out the paperwork
. Which is, I guess, what the authorities here don't want to happen.I'd rather go through the KYC hoops in some detail once to avoid similar hoohahs every time I had to conduct a transaction.
From a law firms perspective, we have to verify the address and identity of all of our clients. If the client is a company, it is address and identity of two directors, plus address and identity of any beneficial owners (i.e. someone who controls the company at the top of the ownership chain). That can be an absolute ball ache to work out if the ownership structure is full of Cayman/BVI/Jersey etc. companies.
Chap above is correct that it is risk based and based on a particular businesses risks. If we have a high risk client, a higher level of due diligence is required. If we have a low risk client (for example a PLC or a government body), the checks can be mostly dispensed with.
We are meant to do it before we give any advice, but we absolutely have to do it if money is coming through our client accounts (though we don't have to do it to receive money in payment of fees). So anyone who will hold your money and either return it to you or use it for a purpose you direct has to do these checks.
Chap above is correct that it is risk based and based on a particular businesses risks. If we have a high risk client, a higher level of due diligence is required. If we have a low risk client (for example a PLC or a government body), the checks can be mostly dispensed with.
We are meant to do it before we give any advice, but we absolutely have to do it if money is coming through our client accounts (though we don't have to do it to receive money in payment of fees). So anyone who will hold your money and either return it to you or use it for a purpose you direct has to do these checks.
BertBert said:
When you say 'risk' can you tell me more about how that's defined and why it's considered business risk please?
Thanks
Bert
I high risk client could be, for example, an offshore company buying a property. The company may have several holding companies above it. The firm would need to show it knows the ultimate beneficial owner. Thanks
Bert
Or it could be a random who walks in with 300k of tenners and wants the firm to manage buying a house or a business. The firm would need to show that the cash was legitimate.
Mr B buying a house with a deposit coming from a UK bank and the rest from a mortgage would be low risk.
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