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Know Your Customer - Retrospective Checks Still Essential

03 February 2005

Many financial services companies have still to complete identity checks on existing customers, which they are required to do as part of anti-money laundering legislation, reports Leeds-based credit reference agency Callcredit.

Callcredit compliance manager Beverley Dewhirst said:

"It's clear from the enquiries we receive about our Know Your Customer (KYC) services that many companies are still uncertain what checks they need to carry out. Some even think that it's not essential to know their existing customers as long as they have systems in place to check the identities of new customers."

Although the FSA has not been as vocal in recent months about retrospective (KYC) requirements, it still expects companies to have shown due diligence in their work toward knowing their own customer base.

This means companies that fall within the anti-money laundering regulations are required to carry out an overall risk assessment, which is fully documented and acted on appropriately. The only time when a company is not required to do retrospective verification is if it has carried out the risk assessment and can demonstrate that, under its own KYC requirements, its client and product base holds no risk.

In CallVerify, Callcredit offers financial services companies a fast, easy-to-implement and cost-effective electronic identity verification solution. CallVerify confirms customers' identities against a variety of public and private data sources, and provides a full audit trail. Information sources used include the Electoral Roll, Postal Address Files, telephone files, and 'SHARE for Money Laundering', Callcredit's closed user database of several millions of personal credit account records.

Beverley Dewhirst added:

"CallVerify provides a quick and accurate method of bulk verification. It is a real risk to believe that your requirement to 'Know Your Customers' has gone away. You are still required to show your own due diligence in this matter."

She said:

"Should any investigation take place, the steps you took at this time of heightened awareness will be considered in any action taken against your company. Many companies are still going through the process of verifying the identity of their current customer base. In addition a number of organisations that decided not to proceed with re-verification due to other commercial priorities are now re-evaluating the commercial risk of their decision."

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