12. VERIFYING IDENTITY FOR CORPORATE CUSTOMERS
TABLE OF CONTENTS
12.1 Introduction 2
12.2 Public Registered Companies 2
12.3 Subsidiaries of Public Registered Companies 3
12.4 Partnerships/ Unincorporated Businesses 3
12.5 Private Companies 3
12.6 Establishing the Identity for Lawyers and Accountants 4
12.7 Clubs & Societies 4
12.8 Charities in England & Wales 5
12.9 Charities in Scotland & Northern Ireland 5
12.10 Church Bodies 5
12.11 Local Authorities, Government Departments, Universities 5
12.1 Introduction
Corporate structures, by their very nature, provide a common route for criminals to launder their money. The risks, and hence the verification requirements, vary according to the type of business and the risk posed by the transaction. Regardless of the corporate structure, when conducting any business, it will always be necessary to complete a Corporate Identification Verification Certificate.
The requirements for verification of different corporate structures are detailed below.
12.2 Public Registered Companies
Public Registered Companies (plcs), which are quoted on a recognised or approved stock exchange, are considered to be publicly owned. As such the verification checks for these companies are at a lower level than for other business types. Essentially this means that you only have to evidence that the firm is indeed listed on an exchange and demonstrate that the person with whom you are dealing has authority to act for the firm.
To evidence that the firm is quoted on a recognised exchange you should find it’s listing in the press or by any other reasonable means (e.g. internet search – site www.londonstockexchange.com will provide both confirmation of listing & SEDOL number) and make a note of the SEDOL number. The SEDOL number and the exchange that the firm is quoted on should be recorded in the relevant boxes on the Corporate Verification of Identity Form.
There are a variety of methods available to demonstrate that the individual with whom you are dealing has authority to act for the firm. In cases where a director of the firm has written to you in respect of the transaction on company letter headed paper then that in itself is sufficient to meet the requirements.
Where the individual with whom you are dealing is not a director/has not written to you in respect of the transaction then you can do any of the following:
§ copy the suitability letter/transaction details to the company’s financial controller/treasurer. If this route is being followed then the address used should be independently verified. You should inform the customer that this is part of the process that will be followed;
§ call the company on an independently verified number, e.g. from the phone book and check the individual’s credentials with a third party at the firm. Again it is likely that you would need to inform the customer that this was part of your procedure;
§ obtain a copy of the list of directors; if the individual with whom you are dealing appears on the list this will be sufficient to evidence their ability to act for the firm;
§ obtain a copy of the board resolution giving the individual authority to act;
§ obtain confirmation from the legal department of the firm that the individual is authorised to act.
12.3 Subsidiaries of Public Registered Companies
Subsidiaries of public companies may be dealt with in accordance with the guidance for Public Registered companies given above. However, independent confirmation should be obtained to verify that the company is a subsidiary of the parent.
This could be through sight of annual reports from the parent company, which make reference to the subsidiary or by obtaining a letter of confirmation from the company secretary of the parent company.
12.4 Partnerships/ Unincorporated Businesses
§ Where your customer is an unincorporated business or a partnership, you must carry out the following verification of identity checks:
§ each partner/beneficial owner must be verified (as a private individual);
§ any individual not in the above group who has the ability to control the investment or product (e.g. signatories) must be verified (as a private individual);
§ evidence of the trading address through sight of an original bank statement or utility bill, less than 3 months old, in the name of the company/partnership should be obtained.
You must also satisfy yourself as to the purpose of the partnership/business and the activities they undertake. Where a formal partnership arrangement is in place sight of this should be obtained. The guidance is slightly different where the partnership is a firm of solicitors or accountants. Refer to 9.6 for the separate guidance for the verification of these people.
12.5 Private Companies
When the applicant is an unquoted UK company the following documents should be obtained from an official or recognised independent source to verify the business:
§ a copy of the certificate of incorporation/certificate of trade or equivalent and evidence of the company’s address;
§ this may be a visit to the premises or a copy of a utility bill, bank/ mortgage statement, local authority tax bill or VAT notification;
§ a list of shareholders/directors (this may be included in the annual reports & accounts).
As an alternative to the above you may undertake a search at the Registrar of Companies (Companies House) or make an enquiry via a business service to obtain the information. The free searches at Companies House do not provide a list of directors or shareholders and are not sufficient on their own to verify a private company. You can purchase this information from Companies House online.
If company registration information is not available, e.g. as a result of the firm having been recently set up then a letter from a solicitor confirming that the details have been submitted to Companies House will suffice. Where the transactions being undertaken are such that no third party payments or money transmission facilities are available and you have no suspicion or knowledge of money laundering, adherence with alternative options above will be sufficient.
If you do have a suspicion, or the plan being put in place does allow third party payments or money transmission you must also:
§ carry out verification, as private individuals, for those shareholders with interests of 10% or more;
§ verify, as a private individual, any person not in the above group who has the ability to control the investment or product (e.g. signatories);
§ verify, as individuals, any persons not falling into the groups above but whom has a beneficial interest of 10% or more in the company.
You should seek guidance from the relevant life office in deciding whether the proposed transaction falls within the definition of “high risk” business. You should also retain awareness of changes to beneficial ownership that might occur over time. If you were to carry out further transactions for the same company you would be expected to identify any such changes and ensure that new shareholders or beneficial owners are verified where necessary.
Where the individual with whom you are dealing does not appear on the list of directors that you obtain you should verify that the individual with whom you are dealing is authorised to act. The process for doing this is the same as that outlined in section 9.2 above.
If a search of Companies House / a business information service shows the firms status as “inactive” you should ascertain why an inactive firm is seeking to undertake financial transactions prior to proceeding with the business. In these circumstances you should carefully consider reporting the circumstances to the Money Laundering Reporting Officer (MLRO).
12.6 Establishing the Identity for Lawyers and Accountants
Lawyers and Accountants when acting in the course of their business as regulated firms or individuals can be verified by reference to their Practicing Certificates. Checks on their regulated status can be made through reference to the current membership directory of the relevant law society or accountancy body. However, when they are acting in their personal capacity their identity should be verified as for any other individual acting in that capacity.
12.7 Clubs & Societies
If you are conducting business for a club or society the following steps should be taken to verify its identity:
· You should satisfy yourself as to the genuine purpose of the organisation. This could be achieved by obtaining sight of its constitution;
· At least two of the club or society contacts should be verified as private individuals (in line with chapter 6, 7 or 8 of these procedures as appropriate).
For investment clubs i.e. those whose purpose is to purchase regulated investments all members should be considered as individual customers and verified accordingly.
12.8 Charities in England & Wales
The verification rules in respect of charities have two purposes – firstly to prove that the charity actually exists and secondly to demonstrate that the individual with whom you are dealing is authorised to act for the charity. This is achieved in the following way:
the existence of the charity can be verified by checking with the charity commission. This can be done online (http://www.charity-commission.gov.uk ) or by telephone (0870 333 0123);
§ the charity commission will also provide details of the charity’s “correspondent”. If the person undertaking the transaction is the named correspondent then no further verification is required;
§ in cases where the person undertaking the transaction is not the correspondent you should copy the suitability letter correspondence to the correspondent with a covering note requesting they contact you urgently if there is reason to suggest that the application has been made without authority.
12.9 Charities in Scotland & Northern Ireland
Charities in Scotland & Northern Ireland are not registered with the Charity Commission. Accordingly verification of these entities should be carried out in line with the information provided above relating to Clubs & Societies. As an additional check you should contact the Inland Revenue to verify the body’s charitable status.
12.10 Church Bodies
The identity of a church body should be verified by writing to the appropriate headquarters or regional organisation of the denomination. Additionally at least two primary contacts should be verified as private individuals.
12.11 Local Authorities, Government Departments, Universities
When arranging transactions for the above bodies the following checks should be undertaken:
· the principle address of the body should be verified. This could be achieved via a visit to premises, by obtaining sight of documentation, e.g. utility bills sent to the organisation at the address, or by finding the organisation listed by an official source at the address in question;
· steps should be taken to demonstrate the legal standing of the organisation, i.e. to demonstrate that it is a government body etc. Again this could be achieved through finding it listed by an official source as such.
Additionally you should evidence that the individual with whom you are dealing has authority to act. This usually be achieved through one of the following:
· copying the suitability letter/transaction details to the organisation’s financial controller/treasurer. If this route is being followed then the address used should be independently verified. You should inform the customer that this is part of the process that will be followed;
· calling the company on an independently verified number, e.g. from the phone book and check the individuals credentials with a third party at the firm. Again it is likely that you would need to inform the customer that this was part of your procedure;
· obtaining confirmation from the legal department of the organisation that the individual is authorised to act.