MLA - Non Residents?

MLA - Non Residents?

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Two parts to my question really both arising from the new MLA regulations about to come into force.

Firstly, I already have a handful of foreign nationals operating UK limited companies. They are private limited companies and the shareholders are all directors in each. They are long term clients (5-10 years), none are doing anything dodgy, trading with other UK companies and residents, apparently legitimately, no sign of large amounts of cash or funds slushing about, UK bank accounts, full audit trail of purchase and sale documentation for trading activities. I am happy in my own mind about these and the ID of the people behind them.

Secondly, I sometimes get referrals from existing clients for their friends and colleagues, again who live abroad, wanted to start UK companies. I have been fairly relaxed about this in the past, but now far more worried.

In both cases, what practical steps can I take to prove identity and address? They have no UK documents at all, having never lived in UK. Can I accept their own country's passport, driving licence, utility bills, bank statements? Would I need originals or could they be copied and signed in their home country by the usual suspects (lawyers, accountants, bank workers, etc). Do I have to arrange for translation as they won't be written in English? How can I be sure that the docs and countersigning are genuine as I don't have background knowledge and can't really check them out?

To be honest, I would be happy simply not taking on such clients, and maybe even to ditch the existing ones to save problems, but can I do that? Am I not being racist or whatever if I refuse to take on a foreign national when I am happy to take on a British National?

Help!!!

Ken Howard

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By User deleted
27th Nov 2007 13:12

HI Ken
I have accepted copies of passports that are signed by a foreign notaire/legal representative and asked for copies of utility bills and photo driving licenses. I have had docs translated in the past but it raises some really tricky issues currently with personal data. On saying that I have never needed a translation for certified copies as there is nothing to translate. Of course there is a risk that the notaire is fake, but these days so many foreign businesses are listed on the internet that they should be searchable. To get around that you can ask for the copy to be sent directly by the notiare or equivalent.

For your clients pre 1st March 2004, you will need to take a view on what checks you need to make after doing a risk assessment for each as part of you ongoing due diligence, and then keep your records and keep reviewing as you go.
You may decide that it is not necessary to have a passport copy under the circumstances. Personally, I am going to ensure a copy is on file with the engagement letter from now on, and treat it as a routine compliance measure. Seems daft not to.

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David Winch
By David Winch
27th Nov 2007 20:24

Some points to remember

Ken

Some points to remember:

1) The MLR 2007 do indeed require customer due diligence and ongoing monitoring in relation to existing clients as well as new ones, but this does not mean you have to get everyone's ID on file by 15 December - you can collect it over time

2) Customer ID does not necessarily have to be confirmed by a passport or other ID document, it can also be confirmed by documents which you already have on file, such as a bank statement or return or document issued by a government body which shows the client's details (such as a tax return, etc) but you must specifically retain copies of these as ID (it is not sufficient just to think to yourself "I know this client is OK and I will have documents in the file")

3) In respect of a customer whom you never meet there is no particular value to an ID document which has a photo, as you cannot check the photo to the likeness of the client

4) Because of MLR 2007 Reg 14, a customer whom you never meet will automatically require enhanced customer due diligence and enhanced ongoing monitoring

5) Be especially alert to the possibility that an overseas client may be a PEP and if they are that you go through the additional procedures required in relation to PEPs - see paras (4), (5) and (6) of Reg 14.

You can accept foreign passports and driving licences and you can accept copies certified by overseas lawyers, but you ought to check the existence of the overseas lawyer, e.g. by looking him up in a directory of lawyers in his country. It may be that the UK Embassy of the country concerned can tell you of a recognised directory of lawyers in the country.

Even so you can never be sure that ID documents supplied by anyone (UK or foreign) are genuine. Just as important are the points you yourself make that you are alert to what your clients are doing and they do not appear to be involved in anything dodgy.

Finally, I do not think anyone could criticise you if you decided not to act for overseas clients in future. You would not be racist, you would simply be recognising the geographical limitations of the services which your firm can offer.

David
www.MLROsupport.co.uk

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