Customer Identification Procedures
- Banks are required to implement a systematic procedure for verifying customer identity before entering into a business relationship.
- Identification policies should also cover individuals acting on behalf of customers.
- Preferred identification documents include passports, driver’s licenses, and alien certificates of registration due to their difficulty to counterfeit.
- Special care is required for non-resident customers; banks should always identify the reason for opening an account in a foreign jurisdiction.
- Identity procedures must not be bypassed regardless of customer circumstances.
Reputational Risk Associated with Prominent Individuals
- Relationships with individuals in important or prominent public or private positions can expose banks to significant reputational and legal risks.
- Such relationships may attract media scrutiny and political reactions even when illegality of funds is unproven.
- Banks may be subject to information requests, seizure orders, and mutual legal assistance procedures.
- Potential liability includes damages claims by affected states or victims.
- Bank officers and employees risk charges of money laundering if they knowingly or should have known about corruption-linked funds.
Prohibition on Non-Face-to-Face Customers
- The guideline eliminating Item 2.2.4 reflects the prohibition on opening accounts without face-to-face contact.
- This aligns with Rule 9.1.f of the Implementing Rules and Regulations of the Anti-Money Laundering Act, as amended.
On-Going Monitoring of High Risk Accounts
- Banks must maintain clear policies, internal guidelines, procedures, and controls for monitoring high risk relationships.
- Special vigilance is required for clients holding important/prominent positions and their related persons or companies.
Guidance on Investigating Customer’s Connections
- It is acknowledged that banks cannot investigate all distant family, political, or business connections of foreign customers.
- Investigative efforts depend on asset size, transaction patterns, economic context, country reputation, and credibility of explanations.
- High profile individuals or their associates may appear as ordinary business people to mask privileged relationships.
Administrative and Implementation
- The revised guidelines are to be implemented immediately by banks.
- Issued and adopted on October 17, 2003, signed by Deputy Governor Alberto V. Reyes.