Portugal’s KYC Procedures: A Comprehensive Guide

Introduction

In an effort to combat money laundering and terrorist financing, Portugal has implemented strict know-your-customer (KYC) procedures for banks operating within its borders. These procedures are designed to strike a balance between combating financial crime and protecting customer privacy while also facilitating legitimate transactions and business activities.

Electronic Signatures in Portugal

According to Article 3, Section 4 of the Portuguese Civil Code, electronic signatures are recognized as valid provided that the parties have explicitly consented to their use. The country’s e-signature laws follow the EU Directive on Electronic Signature, which provides for a two-tier jurisdiction, recognizing both digital and simple electronic signatures as legal and enforceable.

Risk-Based Approach

To comply with Anti-Money Laundering (AML) regulations, financial institutions in Portugal must adapt the nature and scope of their verification and diligence procedures based on the risk associated with:

• The type of customer
• Business relationship
• Product
• Transaction
• Origin or purpose of funds

This risk-based approach is outlined in Law nº25/2008, which transposes the Third Directive.

Additional Due Diligence Measures

For non-face-to-face transactions and relationships, additional due diligence measures are required to ensure that anonymity is not exploited. These measures include:

• Submitting suspicious activity reports (SARs) to the Policia Judiciaria
• Maintaining detailed records of customers’ transactions and activities

Data Protection Measures

The Portuguese government has implemented measures to enhance data protection, including:

• Restrictions on the transfer of credit reports
• Requirements for external auditors to report on banks’ AML systems and controls

Identification Documentation

Copies of identification documentation can be certified by external third parties such as notaries. The country’s National ID card, known as the Cartão do Cidadão, is mandatory for all citizens starting at age 6, although it is not compulsory to carry it.

Conclusion

Portugal’s KYC procedures are designed to provide a balanced approach to combating financial crime and protecting customer privacy while also facilitating legitimate transactions and business activities. By understanding these procedures, financial institutions can ensure compliance with AML regulations and maintain the trust of their customers.