4.3 Opening an account

What must a person do before they can open a new account?

Supply the provider with proof of their identity and address

What is this requirement designed to do?

To prevent money laundering and is set out in the Money Laundering Regulations in 2007

What is the term money laundering used to describe?

The ways in which criminals can use accounts to hide the source of their funds and to make payments in support of their activities

What happens to providers who do not follows the legal requirements?

Face heavy fines

• For example, the Financial Conduct Authority (FCA) has previously fined a private bank £4.2 million for falling to take reasonable care to establish and maintain effective anti-money-laundering controls over a period of more than three years (FCA 2013)

What can one document not be used to prove identity and address?

Providers need separate proof of identity and address

If people show provider their documents in branch they must use what?

Originals rather than copies or prints-outs from internet sites

Photographic identification i.e. passports must be what in order to be accepted by the provider?

Must be current

What might people be asked if they apply for an account online?

May be asked to send documents by post, show them to the local branch or upload copies online

Why might posted documents sometimes be photocopies?

If they are signed by a professional such as a lawyer or doctor to confirm that they are true copies of the originals and that the person signing has seen the originals

Why must applicants need to check with their provider which documents are accepted?

As it can vary from provider to provider and account to account

What examples that are often accepted by providers as proof of identity or a UK address according to the former British Bankers’ Association (BBA)?

• Gas, electricity, water or phone bill that is less than three months old

• Council tax bill issued within the current financial year

• Driving licence issued in the UK (photo card and full paper counterpart with current address)

• Current passport

• Employer’s ID card if the employer is known to the provider

• Pension or other security book

• Medical card

• HMRC documentation

• Insurance certificate issued in the last 12 months

• Mail order statement that is less than three months old (BBA Enterprises 2009)

Which people may find it difficult to prove their identity?

People who are on benefits, who are young or who do not pay bills because often do not have the types of document required

What documents might providers accept for people with benefits?

An entitlement letter issued by the Department for Work and Pensions (DWP) HM Revenue and Customs (HMRC) or a local authority, or an identity confirmation letter issued by DWP or a local authority

What documents might providers accept for young people?

Birth or adoption certificates as proof of identity, they would also need a confirmation letter from their school / college / uni / education / care institution or their employer stating their name, address and details of their educational or employment status

• This letter needs to have been issued in the last 12 months

• Students may be able to use their UCAS letter

• For some accounts designed for very young children, the parents’ or guardians’ identification and address details are taken instead

Why might a provider refuse an application to open an account?

If the provider thinks that the applicant would not be a profitable customer

What might a provider do instead of refusing an application to open an account?

Suggest that people open a different type of account