Anti MLR

Are you an immigration officer?

If, as I suspect, not; you have no right to ask for a passport (quite apart from the fact not everyone has one!) 

This subject has been done to death in these forums, but in summary you need to satisfy yourself that the person is who he says he is.  There are many ways to achieve this but insulting prospective clients with demands for their documents is not, in my opinion, the best way.

I gather a discrete Experian search will give you all the information you need along with your letter of engagement posted to the address given; with the countersigned copy to be returned will give you all the information you need. 

The regulations themselves simply state:

The Money Laundering Regulations 2007

5.  “Customer due diligence measures” means—

(a)identifying the customer and verifying the customer’s identity on the basis of documents, data or information obtained from a reliable and independent source;

... no mention of passports, utility bills or anything else other than a little common sense.

We ask for passport or driving licence

We ask, not demand, to see these documents and people are so used to being asked for ID these days that they quite often bring it with them to the initial meeting.

We also ask for a recent utility bill, bank statement or HMRC document. It is quite easy and simple, and I have only once had the need for electronic verification, and I found Veriphy to be very good, and they didn't tie me into numerous checks.

Think of the ID checks as being your check on the potential clients cooperation. If they start moaning about what is such a common occurrence these days, then suspect that they will not be as cooperative as you would wish.

@Hansa

If you feel so strongly about it why are you doing the checks at all?

You are still doing what I do, but in a different way ;)

Freedom of expression means that everyone has the right to ask

for "papers" or "documents" or for a passport, doesn't it?

It's a human right, isn't it?

Different viewpoint @Hansa

Your opinion is that asking for a passport or driving licence is overtly treating them as criminals!!!

My opinion is that we are always open and honest with our clients and prefer to do these checks with their knowledge, rather than 'behind their backs'.

It also gives the message that we fulfil all our professional responsibilities, and we don't take shortcuts. I like to get that message across quite early in our relationship and quite honestly I haven't had a single client object to producing these documents, or even appear to be uncomfortable with the process.

I am sure if they thought that I was treating them like a criminal they would be out of the door and wouldn't return. Also, if they were dodgy this may just help me avoid wasting a lot of time on them.

@hansa....whilst you paint quite the picture

of 'accountants' demanding a passport from a client at gun point, I am sure most just request what is actually quite convenient for most individuals to provide.....and contrary to your suggestion I am sure they use 'common sense' where the requested documents are not available.

Missing the point I fear

As always in these type of threads, particular words or phrases are latched onto, and the overall point is missed.

Q. -  The OP asked whether passports/utility bills (lets call it "ID") should be required (presumably to commence a professional relationship).

A. -  (mine) was that the MLR do NOT require such "ID" documents, they simply require that you know who your customer/client is.  MLR2007 - S 5(a) was quoted verbatim in support.

My point was not that clients expect (or not) such requests (for "ID"), or that they are easy to comply with or convenient etc etc.  

Rather; my points were

(1) Questioning the expectation that these requests (for "ID") are the "norm" and if they are, why? 

(2) Pointing out that the state requires various groups (Accountants/Lawyers etc) to act as unpaid informers and that, in civil liberties terms, this is already half way to being a police state. (just add millions of surveillance cameras, DNA testing of those not convicted, and a thousand other small civil liberties infringements and the UK is far more than halfway).

(3) That instead of rushing to assist the state in its desire to monitor and control it's citizens, Professionals should (a) question WHY they should be part of this apparatus and (b) reduce their co-operation to the barest minimum and then under protest.

No other country that I deal with on a regular basis has anything like this level of state intrusion into private matters - In many (notably Germany - perhaps due to it's history) the Constitutional Court or equivalent strikes down legislation that is felt to be intrusive! 

The man's got a point

I would imagine that we are already at the stage where some accountancy firms (particularly the ones heavily orientated by checklists/written procedures) may be actively turning down work when the clients somehow fail the initial AML checks.

For example, say a new client presents himself who does not drive and does not have a passport. The fact that he has no simple way to verify his identity (actually required by legislation or not) may be enough to persuade the firm involved that it will be more trouble to engage him than the job will be worth.

I am sure that we have all encountered this attitude before from banks etc.

Common sense

Maybe Hansa phrased his initial response badly, and made it appear to be an attack on the OP for even considering asking for passports.

Looking at documents is the easiest and most sensible way to complete the ID checks, in my humble opinion.

I don't mind the thread going off topic and turning it into a discussion about the necessity for the checks, and have started a similar thread in Time Out, if anyone wishes to participate.

Common Sense

In terms of AML, common sense has little if anything to do with it.

For example, a mobile phone bill is not acceptable proof of ID or address even though applying for one will generally involve a detailed credit check in itself. Contrast that with say, an electric bill where an account can be set up over the phone in a matter of minutes. Ultimately, all it will prove is that the person has at least access to the address provided. 

A provisonal drivers licence is not acceptable whereas the full one is (technically and according to certain instituitions like the Post Office).

How many potential clients have a firearms certificate?

Isn't a police state better than a criminal state, 4 honest ...

Isn't a police state better than a criminal state, for honest citizens?

IMO here's a counter to each of Hans' points:

(1) Questioning the expectation that these requests (for "ID") are the "norm" and if they are, why? Answer: for the improving the certainty of detection of crime,  and reducing the concomitant costs of crime for honest UK citizens..

(2) Pointing out that the state requires various groups (Accountants/Lawyers etc) to act as unpaid informers and that, in civil liberties terms, this is already half way to being a police state. (just add millions of surveillance cameras, DNA testing of those not convicted, and a thousand other small civil liberties infringements and the UK is far more than halfway). Answer: for cutting the costs of the improving the certainty of detection of crime, in view of the "cuts" caused by Labour's rotten rule of busy fools from 1997 through 2010.

(3) That instead of rushing to assist the state in its desire to monitor and control it's citizens, Professionals should (a) question WHY they should be part of this apparatus and (b) reduce their co-operation to the barest minimum and then under protest. Answer: for the improving the certainty of detection of crime, and for reducing the costs of crime for honest UK citizens.

Thank you @dstikl

You put forward the less attractive alternative.

If we do not assist in bringing criminals to justice, by whatever means, then we are either participating in the criminal act, or turning a blind eye to it. Everyone, except the criminals, would lose out as a result.

Should a client not be prepared

to let me see his passport or photo drivers licence I would have to decline to act for them.

Being a tax adviser is a position of trust both ways.

The police state is here already

I think the public need to know so we always explain why we are asking for information and what penalties we will receive if we don't.

I always ask for photo ID either a passport or driving licence. It is the easiest and least cost way of complying with theses ridiculous regulations.

HMRC then verify the clients existence by issueing a UTR so it is all a bit of a nonsense and of no use to any one !

Why would a client not exist ? Or how could they have a false identity with HMRC ? and if they have managed to do this they will have a fake passport etc.

Companies House have always and still do accept fake individuals (or variations thereof) as officers of companies. I should imagine it is fairly easy to become someone else or you could just not bother and get paid cash and say you are someone else.

Trouble is the security services like to play James Bond.

Josef would be proud!

Hey guys, please just read again some of the responses justifying the "need" for ID checks. Honestly, they could have been uttered by Josef Goebbels! I accept that we have to do what we have to do . . . mainly because we are powerless to do otherwise . . . . but please don't tell me that honest-to-God criminals and terrorists can't find ways and means to circumvent these ridiculous and onerous requirements.

Chris.

"Hello officer, come right in and have a look around"

I was going to ask Hansa how a "discrete" check of someone else's monitoring of a citizen is a lesser infringement of civil liberties than an open request of that citizen to see a document for which they have voluntarily subscribed.

However, I'm sympathetic to the general point that Hansa makes regarding excessive surveillance and monitoring by the state.  When I see complacent responses such as that of dstickl I worry that the war against this is being lost.

It's simplistic nonsense to suggest that the opposite of a police state is a criminal state, not to mention insulting to those thousands of brave individuals who have resisted, and continue to resist, police states around the world. 

If dstickl's primary concern for a society is that it should be able to detect crime at the lowest possible cost, then all I can say is what a morally and culturally impoverished world that would be.  That doesn't make me pro-crime or pro-criminals, it just means I value my liberty far more than I fear crime.

Democracies pride themselves on the checks and balances that prevent those with power exploiting it to excess.  That extends to everyone - the government, parliament, the judiciary, the police, the security services - or at least it should.  If you don't think that's important then consider whether you'd like, say, the police to be given a right to search you or to have unimpeded access to your home, without need of a warrant, at any time and without notice.  Only a fool would consider that reasonable but I dare say it might detect a crime or two.

This is a long way from MLR requirements but, in a small way, those rules are part of the same issue.  Such intrusions should always have to be justified and strictly limited.

That seems to be the way of the modern world

If you don't have the docs, you don't exist (functionally).  A bit like not being online.

Customer services, human resources - all the same.  Not designed to serve the individual at all but to merge individuals into readily digestible groups for corporate advantage, be it cost cutting, ease of control or whatever. 

Rural rules may be a bit different......

I'm lucky enough to live & run my practice in rural north wales, I usually go to see any new/potential client at their business which is usually their own home or parents home! Proof of address ticked/

Most clients come to me on personal recommendation, third party verifivcation ticked/ Although conversation usually comes round to several mutual acquantances living locally etc.........

As an accountant, first thing seen to do accounts is usually their bank statements again ticked as official address proof.

I do some times ask if they happen to have a photo driving lic, just as back up no-one has ever been surprised to be asked. Apart for the odd farming client who don't have other photo ID and yes offer their fire arms cert to copy instead!

Clarification

I have seen some opinions on here stating that sending engagement letters to the addressee and coming back signed was some proof of address.

Well, on a recent ACCA visit, after my MLRO questioning was finished I asked the assessor her opinions on this and she categorically said that it proves nothing. In her words, a criminal could be using the address for their fraudulent activities and intercepting the post.

So I think I will stick with passport/photo driving licence and a utility bill and/or visiting the client at their home.

@colinhigginson

Unfortunately it is the case that false passports and other means of identification can be purchased relatively readily and inexpensively.

None of the usual means of ID provide "proof" that the client is who he says he is - or that he is fundamentally honest and law abiding.

The conduct of the client after you have taken him on will give you an indication of that - for good or ill.

Sending a letter of engagement by post to an address and having it returned by the client demonstrates that the client has access to post sent to that address.  To that extent it can be useful as a part of client due diligence.

David

Who bothers with engagement letters anyway?
Experian are of no use if you need an overseas client to prove ID so I always ask for a copy passport photo page and a utilities bill or driving licence

Fascist state ?

If you don't have a website, work for yourself so only have you home 'phone number. and dont subscribe to LinkedIn etc, then you don't exist as far as AWeb is concerned, which is why I will no doubt shortly "disappear".

Similarly, my wife's passport has expired, she doesn't drive, and all the household bills are in my name. As a result I had the devil's own job getting the bank to put her name on my banbk account.

Maybe we should just tattoo identity numbers on everyone's arms and be done with it.

Original

"far more useful than a smudgy or even photo-shop'd copy of a driving licence I suggest"

I ask to see the original and I expect all sensible accountants do. In fact, it is required.

"A provisonal drivers licence

"A provisonal drivers licence is not acceptable whereas the full one is (technically and according to certain instituitions like the Post Office)." 

A provisional driving licence doesn't need a photo - even if it did you could send a photo of your cat. A full driving licence involves somebody comparing you and the photo during the test.

Measures

"Why would a client not exist ? Or how could they have a false identity with HMRC ? and if they have managed to do this they will have a fake passport etc."

Even if it is possible to supply a fake passport it still requires somebody to go to the trouble of obtaining one. If there is an investigation later the copy of the fake passport would still be helpful.

Do banks say that because it is still possible to rob a bank despite security measures there is no point having the security measures?

Other ways

Passport and utility bill is only one form of evidence. You can check ID and address online.

get savy

We are only having a problem with this because we do not understand or are rebelling against the world we now live in (created by our politicians)

Our children have grown up with CCTV , finger printing at school etc and under state control of every aspect of their lives.

They have adapted and found ways round this, wearing hoodies to protect right to a private life and lying about their age so they can be on facebook being just two examples.

Just photocopy a passport / photo driving licence / anything really and you will be ok.....It does not matter whether they are real or not as other behaviour as mentioned above will dictate whether you continue to act or not.

We are not really contributing to better society by any stretch of the imagination.

The checks are of no use to law enforcement unless it enables them to hang you instead of a real criminal - I don't think it matters who they bang up so long as they get a result for the statistics and their pay rise/ promotion.

@colin

I know who I would believe between ACCA person and David Winch.  Still if you stick with ACCA David can visit you in jail.

If you have an electronic check it should indicate if a re-direction of mail is in place.  Our MLR suggested that a Special Delivery Letter to the address with a request for an acknowledgement on the letter in the SD was sufficient because SD letters are not re-directed.

How far ?

Just how far are accountants prepared to go before they say enough is enough ?

Self assessment meant that accountants started doing work previously done by HMRC.

Checking ID is carried out for the state's benefit, not ours.

Reporting money laundering is also unpaid work on behalf of the state.

I heard a senior tax officer suggest that accountants should be made responsible for collecting tax due from clients and paying it to HMRC.

Just where do we draw the line ?

The same applies to money laundering, do you report a client who has fiddled £20k?  £10k ?  £1k ?  £20 ?, just where is the line because I doubt there's a self employed person out there that hasn't put the odd £50 in their back pocket, or claimed against the business for petrol they used to drive to their holiday caravan.

Wow, there's life in this thread yet!

I've been away on business the last 24 hours and find a number of new comments - a number of them referring to earlier comments of mine directly or indirectly.

In thematic rather than date order: 

dwgw 18/04/2012I was going to ask Hansa how a "discrete" check of someone else's monitoring of a citizen is a lesser infringement of civil liberties than an open request of that citizen to see a document for which they have voluntarily subscribed.

I don't think I said that, in those words, in this thread, but possibly offered it as an option in another similar one. In fact I do not do this.  As I said on 10/4

"I just go about it differently.  (As a start, I request a professional reference on all new clients...).

I am NOT bound by MLR 2007 but by more reasonable regulations elsewhere. I satisfy myself by a risk based assessment of both the job in hand and the client. For example: at the bottom end, if someone, introduced by an existing client,  asked me to prepare/draft a simple business plan for a fixed fee, I would see no reason to ask for any bona fides (other than security of payment).  At the top end of the potential risk scale: a new client coming in off the street (or internet) asking for (say) a complex structure utilising nominees and/or trusts would most certainly result in my wanting good evidence of who they were and, by the by, I would probably end up with a passport copy etc etc. AND a professional reference. As for "ongoing" clients I would ask for a professional reference and would have far more paperwork than standard ID documents and these would certainly "beat" even the onerous ML standards laid down by the UK professions.  However what I do is primarily advisory and never includes bread & butter sole trader accounts and/or tax returns etc. for which I truly cannot understand the MLR "reasoning".

pauljohnston 18/4  said: Should a client not be prepared to let me see his passport or photo drivers licence I would have to decline to act for them.  Being a tax adviser is a position of trust both ways.

From this I assume that pauljohnston proffers his passport etc to the client? or is the (easily forged) yellow pages listing & practising certificate on the wall considered enough to justify HIS bona fides with the potential client?

The Black Knight 18/04/2012 The police state is here already I think the public need to know so we always explain why we are asking for information and what penalties we will receive if we don't. AND Purple_Pig 19/04/2012Just how far are accountants prepared to go before they say enough is enough ?  I couldn't agree more and these comments encapsulate much of what I was trying to express.. . .  So very sad.  and finally ... Old Greying Acc...19/04/2012 Hansa's obviously ... not a Chelsea fan then! No I'm not any kind of football fan and thus I have no idea what this comment alludes to! 

Reliable sources

So again I ask the question - my wife has no driving licence, her passport has expired, in short she has no photographic ID.  Is she then to be denied the assistance of an accountant on that basis?  Isn't that discrimination against one section of society?

The Act says - a") identifying the customer and verifying the customer’s identity on the basis of documents, data or information obtained from a reliable and independent source." 

So, according to that, if an existing client who I know to be reliable, introduces his friend/neighbour and confirms his identity, that in itself is sufficient as it is "information from a reliable source".

Perhaps accountants are actually making much more of this than the legislation actually demands.