Anti -Money Laundering Policy June 2021
6 Customer due diligence procedure
6.1 Where the Council is carrying out certain regulated business (accountancy, audit and certain legal services) and:
a. forms an ongoing business relationship with a client; or
b. undertakes an occasional transaction amounting to 15,000 Euro or more whether carried out in a single operation or several linked ones; or
c. suspects money laundering or terrorist financing; or
d. doubts the veracity or adequacy of information previously obtained for the purposes of client identification or verification
then customer due diligence measures must be applied and this Customer Due Diligence Procedure must be followed before the establishment of the relationship or carrying out of the transaction. This is covered in Regulations 27-38 of the Money Laundering, Terrorist Financing and Transfer of Funds (Information on the Payer) Regulations 2017.
6.2 Applying customer due diligence means:
a. identifying the client and verifying the client's identity on the basis of documents, data or information obtained from a reliable and independent source;
b. identifying the beneficial owner (where he/she or it is not the client) so that you are satisfied that you know who the beneficial owner is, including, in the case of a legal person, trust or similar legal arrangement, measures to understand the ownership and control structure of the person, trust or arrangement, and
c. obtaining information on the purpose and intended nature of the business relationship
Please note that unlike the reporting procedure, the Customer Due Diligence Procedure is restricted to those employees undertaking relevant business.
6.3 In the above circumstances, employees in the relevant services of the Council must obtain satisfactory evidence of the identity of the prospective client, and full details of the purpose and intended nature of the relationship/transaction, as soon as practicable after instructions are received.
6.4 There is also now an ongoing legal obligation to check the identity of existing clients and the nature and purpose of the business relationship with them at appropriate times. The opportunity should also be taken at times to scrutinise the transactions undertaken throughout the course of the relationship (including, where necessary, the source of the funds) to ensure they are consistent with your knowledge of the client, its business and risk profile. Particular scrutiny should be given to the following:
a. complex or unusually large transactions;
b. unusual patterns of transactions which have no apparent economic or visible lawful purpose; and
c. any other activity likely by its nature to be related to money laundering or terrorist financing.
6.5 Once instructions to provide relevant business have been received, and it has been established that Paragraph 6.1 above applies or it is otherwise an appropriate time to apply due diligence measures to an existing client, evidence of identity and information about the nature of the particular work should be obtained/checked as follows:
Under the legislation there is no need to apply customer due diligence measures where the client is a UK public authority. However, as a matter of good practice, identity of internal clients should continue to be checked.
Appropriate evidence of identity will be written and signed instructions on Council-headed notepaper at the outset of the matter. Such correspondence should then be placed on the Council's client file along with a prominent note explaining which correspondence constitutes the evidence and where it is located.
Most of the external clients to whom the Council provides regulated business services are UK public authorities and consequently, as above, there is no need to apply customer due diligence measures. However, again as a matter of good practice, identity of external clients should be checked.
Appropriate evidence of identity will be written and signed instructions on the organisation's official letter head at the outset of the matter.
Such correspondence should then be placed on the Council's client file along with a prominent note explaining which correspondence constitutes the evidence and where it is located.
With instructions from new clients, or further instructions from a client not well known to you, you may wish to seek additional evidence of the identity of key individuals in the organisation and of the organisation itself.
6.6 In certain circumstances enhanced customer due diligence must be carried out for example where:
- the customer has not been physically present for identification
- the customer is a politically exposed person, typically, a non UK or domestic member of parliament, head of state or government, or government minister and their family members and known close associates
- there is a beneficial owner who is not the customer - a beneficial owner is any individual who: holds more than 25% of the shares, voting rights or interest in a company, partnership or trust.
- when you enter into a transaction with a person from a high risk third country identified by the EU
Enhanced customer due diligence could include any additional documentation, data or information that will confirm the customer's identity and / or the source of the funds to be used in the business relationship / transaction. If you believe that enhanced customer due diligence is required then you must consult the MLRO prior to carrying it out.
6.7 In all cases, the due diligence evidence should be retained for at least five years from the end of the business relationship or transaction(s).
6.8 If satisfactory evidence of identity is not obtained at the outset of the matter, then the business relationship or transaction(s) cannot proceed any further.