Banks consider easing ID rules

BANK customers will no longer need to produce several forms of identification to open an account, under industry proposals published today.

The Joint Money Laundering Steering Group, which represents banks, building societies, investment companies and other financial services firms, published a suggested shake-up in rules that are aimed at preventing money laundering and the financing of international terrorism.

The JMLSG says it wants to allow firms to focus their resources on the minority of customers who carry a higher risk and simplify the document requirements for individuals and firms when proving their identity.

Martin Hall, chairman of the JMLSG editorial panel, said: 'We have taken a radical approach. The new guidance reflects the reality, that most customers are neither money launderers nor terrorists.

'These proposals will mean much less frustration for most customers from repeated requests for several pieces of identity documentation. The proposals will allow firms to counter money laundering and terrorist financing in a much more proportionate, risk-based way, making better use of modern technology.'

Although all new customers of banks and building societies have been required to give proof of identity since 1994, the rules were tightened under the UK Money Laundering Regulations 2003 and the Proceeds of Crime Act 2002.

The industry has since been criticised for applying draconian checks on customers. They are frequently turned down even if they show a UK passport, with bank staff asking for more than one type of ID. The rules were said to be contributing to increased 'counter rage' in branches.

Among customers most affected have been children who have had no previous account and foreigners on working holidays in the UK.

Ian Mullen, the chairman of the JMLSG, said: 'These proposals have been subject to discussion across a broad section of the industry, and with Government, regulators and law enforcement. They are practical and proportionate, recognise the different risk profiles of customers across the industry, and sharpen the focus of anti-money laundering activity generally.'

Previous proposal documents from the group have been revised before being made into firm guidance for financial services firms.

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