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7. (1) Subject to regulations 8 and 10 below, identification procedures maintained by a person are in accordance with this regulation if in Cases 1 to 4 set out below they require, as soon as is reasonably practicable after contact is first made between that person and an applicant for business concerning any particular business relationship or one-off transaction—
(a)the production by the applicant for business of satisfactory evidence of his identity; or
(b)the taking of such measures specified in the procedures as will produce satisfactory evidence of his identity;
and the procedures are, subject to paragraph (6) below, in accordance with this regulation if they require that where that evidence is not obtained the business relationship or one-off transaction in question shall not proceed any further.
(2) Case 1 is any case where the parties form or resolve to form a business relationship between them.
(3) Case 2 is any case where, in respect of any one-off transaction, any person handling the transaction knows or suspects that the applicant for business is engaged in money laundering, or that the transaction is carried out on behalf of another person engaged in money laundering.
(4) Case 3 is any case where, in respect of any one-off transaction, payment is to be made by or to the applicant for business of the amount of ecu 15,000 or more.
(5) Case 4 is any case where, in respect of two or more one-off transactions—
(a)it appears at the outset to a person handling any of the transactions—
(i)that the transactions are linked, and
(ii)that the total amount, in respect of all of the transactions, which is payable by or to the applicant for business is ecu 15,000 or more; or
(b)at any later stage, it comes to the attention of such a person that paragraphs (i) and (ii) of sub-paragraph (a) above are satisfied.
(6) The procedures referred to in paragraph (1) above are in accordance with this regulation if, when a report is made in circumstances falling within Case 2 (whether in accordance with regulation 14 or directly to a constable), they provided for steps to be taken in relation to the one-off transaction in question in accordance with any directions that may be given by a constable.
(7) In these Regulations references to satisfactory evidence of a person’s identity shall be construed in accordance with regulation 11(1) below.
8. (1) Where satisfactory evidence of the identity of an applicant for business would, apart from this paragraph, be required under identification procedures in accordance with regulation 7 above but—
(a)the circumstances are such that a payment is to be made by the applicant for business; and
(b)it is reasonable in all the circumstances—
(i)for the payment to be sent by post or by any electronic means which is effective to transfer funds; or
(ii)for the details of the payment to be sent by post, to be given on the telephone or to be given by any other electronic means;
then, subject to paragraph (2) below, the fact that the payment is debited from an account held in the applicant’s name at an institution mentioned in paragraph (4) below (whether the account is held by the applicant alone or jointly with one or more other persons) shall be capable of constituting the required evidence of identity.
(2) Paragraph (1) above shall not have effect to the extent that—
(a)the circumstances of the payment fall within Case 2; or
(b)the payment is made by any person for the purpose of opening a relevant account with an institution falling within paragraph (4)(a) or (b) below.
(3) For the purposes of paragraph (1)(b) above, it shall be immaterial whether the payment or its details are sent or given to a person who is bound by regulation 5(1) above or to some other person acting on his behalf.
(4) The institutions referred to in paragraph (1) above are—
(b)a European authorised institution within the meaning of the Banking Coordination (Second Council Directive) Regulations 1992(3); or
(c)any other institution which is an authorised credit institution.
(5) For the purposes of this regulation—
“authorised credit institution” means a credit institution, as defined in Article 1 of the First Council Directive on the coordination of laws, regulations and administrative provisions relating to the taking up and pursuit of the business of credit institutions (77/780/EEC)(4), which is authorised to carry on the business of a credit institution by a competent authority of a member state; and
“relevant account” means an account from which a payment may be made by any means to a person other than the applicant for business, whether such a payment—
may be made directly to such a person from the account by or on behalf of the applicant for business; or
may be made to such a person indirectly as a result of—
a direct transfer of funds from an account from which no such direct payment may be made to another account, or
a change in any of the characteristics of the account.
9. (1) This regulation applies where, in relation to a person who is bound by regulation 5(1) above, an applicant for business is or appears to be acting otherwise than as principal.
(2) Subject to regulation 10 below, identification procedures maintained by a person are in accordance with this regulation if, in a case to which this regulation applies, they require reasonable measures to be taken for the purpose of establishing the identity of any person on whose behalf the applicant for business is acting.
(3) In determining, for the purposes of paragraph (2) above, what constitutes reasonable measures in any particular case regard shall be had to all the circumstances of the case and, in particular, to best practice which, for the time being, is followed in the relevant field of business and which is applicable to those circumstances.
(4) Without prejudice to the generality of paragraph (3) above, if the conditions mentioned in paragraph (5) below are fulfilled in relation to an applicant for business who is, or appears to be, acting as an agent for a principal (whether undisclosed or disclosed for reference purposes only) it shall be reasonable for a person bound by regulation 5(1) above to accept a written assurance from the applicant for business to the effect that evidence of the identity of any principal on whose behalf the applicant for business may act in relation to that person will have been obtained and recorded under procedures maintained by the applicant for business.
(5) The conditions referred to in paragraph (4) above are that, in relation to the business relationship or transaction in question, there are reasonable grounds for believing that the applicant for business—
(a)acts in the course of a business in relation to which an overseas regulatory authority exercises regulatory functions; and
(b)is based or incorporated in, or formed under the law of, a country other than a member State in which there are in force provisions at least equivalent to those required by the Money Laundering Directive.
(6) In paragraph (5) above, “overseas regulatory authority” and “regulatory functions” have the same meaning as in section 82 of the Companies Act 1989(5).
10. (1) Subject to paragraph (2) below, identification procedures under regulations 7 and 9 above shall not require any steps to be taken to obtain evidence of any person’s identity—
(a)where there are reasonable grounds for believing that the applicant for business is a person who is bound by the provisions of regulation 5(1) above;
(b)where there are reasonable grounds for believing that the applicant for business is otherwise a person who is covered by the Money Laundering Directive;
(c)where any one-off transaction is carried out with or for a third party pursuant to an introduction effected by a person who has provided an assurance that evidence of the identity of all third parties introduced by him will have been obtained and recorded under procedures maintained by him, where that person identifies the third party and where—
(i)that person falls within sub-paragraph (a) or (b) above; or
(ii)there are reasonable grounds for believing that the conditions mentioned in regulation 9(5)(a) and (b) above are fulfilled in relation to him;
(d)where the person who would otherwise be required to be identified, in relation to a one-off transaction, is the person to whom the proceeds of that transaction are payable but to whom no payment is made because all of those proceeds are directly reinvested on his behalf in another transaction—
(i)of which a record is kept, and
(ii)which can result only in another reinvestment made on that person’s behalf or in a payment made directly to that person;
(e)in relation to insurance business consisting of a policy of insurance in connection with a pension scheme taken out by virtue of a person’s contract of employment or occupation where the policy—
(i)contains no surrender clause, and
(ii)may not be used as collateral for a loan;
(f)in relation to insurance business in respect of which a premium is payable in one instalment of an amount not exceeding ecu 2,500; or
(g)in relation to insurance business in respect of which a periodic premium is payable and where the total payable in respect of any calendar year does not exceed ecu 1,000.
(2) Nothing in this regulation shall apply in circumstances falling within Case 2.
(3) In this regulation “calendar year” means a period of twelve months beginning on 31st December.
11. (1) For the purposes of these Regulations, evidence of identify is satisfactory if—
(a)it is reasonably capable of establishing that the applicant is the person he claims to be; and
(b)the person who obtains the evidence is satisfied, in accordance with the procedures maintained under these Regulations in relation to the relevant financial business concerned, that it does establish that fact.
(2) In determining for the purposes of regulation 7(1) above the time span in which satisfactory evidence of a person’s identity has to be obtained, in relation to any particular business relationship or one-off transaction, all the circumstances shall be taken into account including, in particular—
(a)the nature of the business relationship or one-off transaction concerned;
(b)the geographical locations of the parties;
(c)whether it is practical to obtain the evidence before commitments are entered into between the parties or before money passes;
(d)in relation to Case 3 or 4, the earliest stage at which there are reasonable grounds for believing that the total amount payable by an applicant for business is ecu 15,000 or more.
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