Why solicitors need your ID for anti-money laundering

Legal Need For Client Identification

The Money Laundering, Terrorist Financing and Transfer of Funds (Information on the Payer) Regulations 2017 explicitly call for client identification as part of due diligence measures. Solicitors must verify the identity of their clients before establishing a business relationship or carrying out any transactions. This is reinforced by guidelines from the Solicitors Regulation Authority (SRA), which also mandate thorough identity checks.

Upholding Ethical Standards and Public Trust

As guardians of the rule of law, solicitors have an ethical responsibility to ensure that their services are not exploited for illegal activities. By rigorously checking client identification, small firms can contribute to a larger societal effort against financial crime. Client identification safeguards the integrity of legal transactions, thus upholding public trust in legal services.

 The Necessity for Small Firms

Small solicitors’ firms, in particular, might be seen as easier targets for money laundering schemes because of assumed lax compliance procedures. Consequently, stringent identification processes are not just best practices but vital to the firm’s reputation and legal standing.

 Acceptable Forms of Identification for AML Compliance

To carry out effective identity verification, here are some of the widely accepted forms of identification:

Valid Passport

An international gold standard for identity verification.

 Current Photographic Driving Licence

Recognised across the UK as a reliable form of ID.

National ID Card

Acceptable for clients from countries where national ID cards are standard.

 Utility Bills

Commonly used to corroborate a client’s residential address.

 Recent Bank Statements

Can be used as supplementary evidence of a client’s residential status.

Company Records

For corporate clients, essential documents include Companies House extracts, memorandum and articles of association, and evidence of authority to act for the company.

By focusing on robust client identification processes, small solicitors’ firms not only meet legal and ethical standards but also significantly mitigate the risk of facilitating financial crimes. As we move forward in a digital age, these verification procedures will continue to be a frontline defence against money laundering.