The EU adopted the directive in 2003 and the government has now decided to add new regulations to introduce the directive. The decision was taken to enable the UK to meet threats from crime and terrorism and is part of a wider international effort.
The regulations require firms to put preventative measures in place to ensure they know who their customers are, including conducting customer identification and verification, and undertaking ongoing monitoring where it is needed.
Firms will have to provide more detailed obligations regarding customer due diligence and vary the customer due diligence depending on the risk of money laundering or terrorist financing.
Jeremy Russ, head of marketing and compliance at Beacon, said: “This is another layer of legislation to cope with. The question is how firms will cope? The industry has to have adequate proof that people are who they say they are and live where they say they live. It affects the whole industry.”
Bill Warren, director of associate members for the Regulatory Association of Mortgage Packagers, said: “What this has done is clarified responsibility. Everyone now has to take responsibility for identifying people and appropriate record-keeping. It won’t add a massive amount of extra work. It was an inevitable tightening up of rules.”
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