Financial Crime World

Date of Identity Verification

As required by the Proceeds of Crime (Money Laundering) and Terrorist Financing Regulations, financial institutions must record specific information when verifying the identity of clients using various methods.

Relationship between Affiliated Foreign Entity and Financial Institution

Financial institutions may rely on measures previously taken by an affiliated foreign entity to verify a person’s identity. This is permitted if the affiliated foreign entity has policies in place similar to those under the Proceeds of Crime (Money Laundering) and Terrorist Financing Act, including requirements for record keeping, verifying identity, and compliance programs.

Record Keeping Requirements

If a financial institution relies on another RE or an affiliated foreign entity to verify a person’s identity, it must keep a record of:

  • The person’s name
  • The written agreement or arrangement with the other RE or affiliated foreign entity for the purpose of verifying a person’s identity
  • The information referred to by the other RE or affiliated foreign entity in order to verify the person’s identity

Verification of Identity Using an Agent or Mandatary

Financial institutions may also verify the identity of a person using an agent or mandatary. This can be done through a written agreement or arrangement with the agent or mandatary, who must obtain information and confirm the person’s identity.

Record Keeping Requirements for Agents and Mandataries

If a financial institution uses an agent or mandatary to verify a person’s identity, it must keep a record of:

  • The person’s name
  • The written agreement or arrangement with the agent or mandatary for the purpose of verifying a person’s identity
  • The information referred to by the agent or mandatary in order to verify the person’s identity

Example

Jane Smith wishes to open an account with a financial institution. The institution’s agent, with whom they have a written agreement for this purpose, verifies Jane Smith’s identity using the government-issued photo identification method. In 2019, the agent referred to Jane Smith’s driver’s licence, which expired in February 2021. However, since her name and appearance have not changed, the institution is satisfied that the information the agent confirmed as being Jane Smith’s (her name and photo) is still valid and current.

Conclusion

Financial institutions must be aware of the various methods for verifying a person’s identity and maintain accurate records accordingly. This includes relying on measures taken by affiliated foreign entities or agents/mandataries, as long as certain conditions are met. By doing so, financial institutions can ensure compliance with anti-money laundering regulations and protect against terrorist financing.