An individual’s identity consists of certain information such as name, address and date of birth which enables you to know who they are. Whether you should carry out simplified due diligence, standard due diligence or enhanced due diligence on a specific individual will be determined by you risk based approach.
For simplified due diligence the act of identifying the individual through the collection of relevant information would suffice. However, standard due diligence or customer due diligence as it is referred to within the JMLSG guidance, would require this to be taken a step further. This extra step is the requirement to verify the individual's identity.
When an individual falls into the category for requiring enhanced due diligence then steps must be taken beyond the identification and verification of the identity. Depending on your requirements this can take many forms. Examples of this could be undertaking web based searching and/or employing the use of a adverse information database.
No matter what the level of due diligence initially carried out on the individual there are two additional checks to undertake. Firstly, you will need to understand whether the individual is a politically exposed person (PEP). For individuals previously categorised as requiring simplified due diligence or standard due diligence, being identified as a politically exposed person (PEP) will elevate them to enhanced due diligence. Depending on your risk based approach this is likely to trigger other checks as well as the inclusion of the individual on your politically exposed person (PEP) database.
The second check that must be undertaken is to ensure the individual is not subject to financial sanctions. Unlike the anti-money laundering requirements financial sanctions does not have a risk based approach. When an individual is confirmed as being subject to financial sanctions this must be reported to the relevant issuing authority.
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