Is there any guidance on whether the anti-money laundering customer due diligence (CDD) material forms part of the client’s file? I obtain much of this material directly from the client, copies of which are kept on file.
CDD is completed by the firm to comply with its obligations under the Money Laundering, Terrorist Financing and Transfer of Funds (Information on the Payer) Regulations 2017 and the SRA Code of Conduct 2011, Outcome 7.5. As such, the material collected belongs to the firm, not the client, and firms should keep records of CDD material and supporting evidence, or references to it, for a minimum of 5 years after the business relationship ends or the occasional transaction is completed. It is recommended that you consider holding CDD material separately from the client file for each retainer, as it may be needed by different practice groups in your firm.
For further information, please see Chapter 3 of the Draft anti-money laundering guidance for the legal sector.
We act for an established client who has just instructed us in a property transaction. We have CDD documents on file from four years ago. One of the firm’s partners has known the client personally for a long time - do we need to update the existing CDD documentation?
Factors that may trigger a need for CDD include:
- - a gap in retainers of three years or more
- - a client instructing on a higher risk retainer
- - where you develop a suspicion of money laundering or terrorist financing by the client
- - an existing high-risk client.
For all clients, you should ensure ongoing monitoring of the business relationship to identify any suspicious activity.
When reviewing CDD on existing clients, consider information already on your files which verifies their identity or are available publicly to confirm the details you hold, rather than approaching the client.
It may also be appropriate for the partner who knows the client to place a note on the file providing an assurance as to the client’s identity.
For further information please see Chapter 4 of the draft anti-money laundering guidance for the legal sector.
When carrying out customer due diligence on a client, we normally keep a photocopy of a passport. Does it have to be a black and white copy or can it be a colour copy?
The official guidance approved by H.M. Passport Office and the Lord Chamberlain’s Office issued in 2014 permits colour copying of the personal details page of the passport.
Find out more from gov.uk (PDF)
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Disclaimer: While every effort has been made to ensure the accuracy of the information in this article, it does not constitute legal advice and cannot be relied upon as such. The Law Society does not accept any responsibility for liabilities arising as a result of reliance upon the information given.