PART 3Customer Due Diligence

CHAPTER 1Customer due diligence: general

Requirement to cease transactions etc31

1

Where, in relation to any customer, a relevant person is unable to apply customer due diligence measures as required by regulation 28, that person—

a

must not carry out any transaction through a bank account with the customer or on behalf of the customer;

b

must not establish a business relationship or carry out a transaction with the customer otherwise than through a bank account;

c

must terminate any existing business relationship with the customer;

d

must consider whether the relevant person is required to make a disclosure (or to make further disclosure) by—

i

Part 3 of the Terrorism Act 200081; or

ii

Part 7 of the Proceeds of Crime Act 200282.

2

Paragraph (1)(a) does not prevent money deposited in an account being repaid to the person who deposited it, provided that, in any case where a disclosure is required by the legislation referred in paragraph (1)(d), the relevant person has—

a

consent (within the meaning of section 21ZA of the Terrorism Act 2000 (arrangements with prior consent))83 to the transaction, or

b

the appropriate consent (within the meaning of section 335 of the Proceeds of Crime Act 2002 (appropriate consent)) to the transaction.

3

Paragraph (1) does not apply where an independent legal professional or other professional adviser is in the course of ascertaining the legal position for a client or performing the task of defending or representing that client in, or concerning, legal proceedings, including giving advice on the institution or avoidance of proceedings.

4

In paragraph (3), “other professional adviser” means an auditor, external accountant or tax adviser who is a member of a professional body which is established for any such persons and which makes provision for—

a

testing the competence of those seeking admission to membership of such a body as a condition for such admission; and

b

imposing and maintaining professional and ethical standards for its members, as well as imposing sanctions for non-compliance with those standards.

5

Paragraph (1)(a) to (c) does not apply where an insolvency practitioner has been appointed by the court as administrator or liquidator of a company, provided that—

a

the insolvency practitioner has taken all reasonable steps to satisfy the requirements set out in regulation 28(2) and (10), and

b

the resignation of the insolvency practitioner would be prejudicial to the interests of the creditors of the company.