MORNBFI Vol. 1 - Planters Development Bank

APP. Q-23-e08.12.31GENERAL GUIDE TO ACCOUNT OPENING AND CUSTOMER IDENTIFICATION1. The Basel Committee on BankingSupervision in its paper on Customer DueDiligence for Banks published in October2001 referred to the intention of theWorking Group on Cross-border Banking 1to develop guidance on customeridentification. Customer identification is anessential element of an effective customerdue diligence programme which banksneed to put in place to guard againstreputational, operational, legal andconcentration risks. It is also necessary inorder to comply with anti-moneylaundering legal requirements and aprerequisite for the identification of bankaccounts related to terrorism.2. What follows is account openingand customer identification guidelines anda general guide to good practice based onthe principles of the Basel Committee’sCustomer due diligence for banks paper.This document, which has been developedby the Working Group on Cross-borderBanking, does not cover every eventuality,but instead focuses on some of themechanisms that banks can use indeveloping an effective customeridentification programme.3. These guidelines represent a startingpoint for supervisors and banks in the areaof customer identification. This documentdoes not address the other elements of theCustomer Due Diligence for banks paper,such as the ongoing monitoring ofaccounts. However, these elements shouldbe considered in the development ofeffective customer due diligence, antimoneylaundering and combating thefinancing of terrorism procedures.4. These guidelines may be adaptedfor use by national supervisors who areseeking to develop or enhance customeridentification programmes. However,supervisors should recognize that anycustomer identification programme shouldreflect the different types of customers(individual vs. institution) and the differentlevels of risk resulting from a customer’srelationship with a bank. Higher risktransactions and relationships, such asthose with politically exposed persons ororganizations, will clearly require greaterscrutiny than lower risk transactions andaccounts.5. Guidelines and best practicescreated by national supervisors should alsoreflect the various types of transactions thatare most prevalent in the national bankingsystem. For example, non-face-to-faceopening of accounts may be moreprevalent in one country than another. Forthis reason the customer identificationprocedures may differ between countries.6. Some identification documents aremore vulnerable to fraud than others. Forthose that are most susceptible to fraud, orwhere there is uncertainty concerning thevalidity of the document(s) presented, thebank should verify the informationprovided by the customer throughadditional inquiries or other sources ofinformation.7. Customer identification documentsshould be retained for at least five yearsafter an account is closed. All financialtransaction records should be retained forat least five years after the transaction hastaken place.1The Working Group on Cross-border Banking is a joint group consisting of members of the Basel Committee and of theOffshore Group of Banking Supervisors.Manual of Regulations for Non-Bank Financial InstitutionsQ RegulationsAppendix Q-23-e - Page 1