“Earlier this week the FSA announced that it would not be introducing a review of the identification of existing customers by regulated firms for anti-money laundering purposes. The decision has been made after an extensive cost benefit analysis conducted by PWC and considerable input and
lobbying by many sectors of the industry including AIFA.
“We welcome this sensible decision and whilst we understand and support the need for firms to have systems in place in order to identify their clients, a mandatory review of existing customers' identity would have been an onerous and costly task, particularly for small firms. The obligation to verify the identity of new clients remains. Product providers may not accept new business without evidence of a client's identity. Therefore firms that do not have sufficient documentary evidence for existing clients on file will be expected to gather that information now before submitting an application even if previously exempt, e.g. a pre 1994 client.
“FSA has stressed that reduction of financial crime remains a high priority and firms continue to run a legal and regulatory risk (SYSC 3.2.6R) if adequate systems and controls are not in place.”
