Verification Subjects: A Guide to Identifying and Verifying Individuals and Entities

In the ongoing effort to combat financial crimes and maintain transparency in business dealings, it is essential for institutions to verify the identity and legitimacy of individuals and entities seeking to establish a business relationship. This guide outlines the verification subjects that institutions should prioritize when assessing applications for business.

Verification Subjects

Individuals

• Account Holders: Account holders themselves or principals operating the account
• Individual Trustees: Unless previously verified in connection with a previous business relationship, individual trustees must be verified
• Partners: Partners of firms who are relevant to the application and have individual authority to operate an account

Partnerships

• All Partners: All partners of a firm that is an applicant for business, who are relevant to the application and have individual authority to operate an account
• Verification Process: Verification should proceed as if the partners were directors and shareholders of a company

Companies (including corporate trustees)

• Beneficial Owners: Unless quoted on a recognized stock exchange or a private company with substantial premises and payroll, institutions should verify the company’s underlying beneficial owner(s)
• Definition of Beneficial Owner: The expression “underlying beneficial owner(s)” includes any person(s) whose instructions the signatories of an account are accustomed to act upon

Other Institutions

• Signatories: Signatories who customarily operate the account for associations, institutes, foundations, charities, and other non-profit organizations
• Intermediaries: All signatories who operate the account for intermediaries

Intermediaries

• Power to Operate Accounts: Intermediaries with power to operate accounts on behalf of underlying customers or principals
• Customer Instructions: Customers themselves (or other persons whose wishes the intermediary is prepared to act upon) if documentation is in their name

Exempt Cases

• Small One-Off Transactions: Small one-off transactions, unless linked and constituting a significant transaction
• Postal, Telephonic, and Electronic Business Transactions: Certain postal, telephonic, and electronic business transactions, including non-paying accounts that do not provide money transmission facilities or account transfer capabilities
• Exempt Institutional Applicants: Exempt institutional applicants subject to equivalent guidance notes in another jurisdiction

Conclusion

In conclusion, institutions must establish due diligence procedures to verify the identity and legitimacy of individuals and entities seeking to establish a business relationship. This guide provides clarity on the verification subjects that institutions should prioritize, including individual partners, companies, and intermediaries, as well as exempt cases that do not require verification. By implementing robust verification processes, institutions can reduce the risk of financial crimes and maintain transparency in their operations.