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Immediate Changes To AML Customer Identification Obligations – Are You Safe?

Amendments to the AML/CTF electronic safe harbour procedures for verifying the identity of low or medium ML/TF risk customers have come into effect today. Can you shelter within the safe harbour?

Amendments to the customer due diligence procedures under the AML/CTF Rules have came into effect today as of the 16th of September a long period of public consultation and consideration since mid 2014. The key amendments include:

Collection of information from third parties: Information collected for the purpose of carrying out customer due diligence procedures may now be collected from sources other than the customer themselves. This amendment will allow reporting entities to collect “KYC information” from an independent source and use this information to pre-populate customer application forms. However, reporting entities will need to consider the privacy implications of collecting personal information about its customers from a third party source.

Safe harbour verification for customers: Electronic safe harbour procedures for verifying the identity of low or medium ML/TF risk customers have now been amended to be consistent with the electronic safe harbour procedures that apply to verifying the identity of beneficial owners. To rely on these new safe harbour procedures for electronically verifying the identity of customers, reporting entity’s will need to verify the following information using at least two separate reliable and independent electronic data sources (except in the case of transaction history):

  • customer’s name; and
  • either the customer’s residential address, date of birth or that the customer has a transaction history of at least 3 years.

These changes to the electronic safe harbour procedures for verifying the identity of customers should assist in simplifying the verification processes implemented by reporting entities by providing some flexibility and a consistent approach for customers and beneficial owners.

We think the finalisation of these draft rules is a small step in the right direction in relation to simplifying the customer due diligence requirements for reporting entities. However, as revealed by the findings of the recent statutory review of the AML legislation, there is still a long way to go!

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