PracticeConsulting‘Mindless’ identity checks must stop

'Mindless' identity checks must stop

The government is set to order financial institutions to stop the practice of demanding excessive identity checks from customers they do business with.

Link: Special report: Fraud and how to stop it

Lord Davies of Oldham, a government whip, said: ‘The rules are required to control significant abuse, and we solve that problem not by mindless box-ticking but by an intelligent approach to establishing proper identity.’

He said new guidance is being issued ‘that indicates that, so long as proper identification is established, the means by which it is achieved is for the institution itself to decide’.

He was responding to a series of exchanges in the Lords which began when former Tory minister Lord Peyton of Yeovil demanded the government review the rules which restrict legitimate business customers, but which cause little inconvenience to money launderers.

He said it ‘verges on the barmy’ for banks to require a utility bill to prove a prospective customer lives at a particular address in a letter sent to the address concerned.

Tory Baroness Gardner of Parkes described as ‘overkill’ a requirement by some building societies for proof of identity from their own customers opening new accounts.

Liberal Lord Newby said the institutions were claiming the law required the prescribed checks but customers with longstanding relationships with particular institutions were being required to turn up with passports to prove who they were.

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