Reliance on obliged persons
In some strictly limited cases, a relevant person may meet its obligation to apply identification measures under AML/CFT procedures by placing reliance on measures that have already been applied by another party (referred to as an “obliged person”) to find out the identity of a mutual customer and to obtain evidence of identity.
In order to consider what reliance might be placed on an obliged person, a relevant person will first need to determine what elements of identity must be found out and what evidence of identity is to be obtained for its customer. It will do so in accordance with AML/CFT procedures, and will take into account the relevant person’s risk assessment for the customer. Once it has determined what identification measures it is to apply, a relevant person can then consider whether those measures have already been applied by an obliged person.
Where an obliged person has met its customer, who is resident in the same country as the obliged person, the measures that it has taken to find out identity and to obtain evidence of identity will be different to the identification measures that must be applied by the relevant person in a case where the relevant person is resident in a different country to the obliged person and customer, and where it has not met its customer. Even in a case where the relevant person and obliged person have met a customer and are resident in the same country, the measures taken by the obliged person may still differ to those to be applied by the relevant person to the extent that other factors are different, for example the nature of the product or service to be provided.
The effect of this is that the obliged person may not have found out all of the same information on identity as the relevant person needs, and may have obtained evidence of identity using different documents, data or information. This means that, in practice, the scope to place reliance may sometimes be quite limited, and that it may be necessary for a relevant person to find out more information on identity and obtain evidence for that aspect of identity itself.
However, it is not necessary that the obliged person will have found out identity or obtained evidence of identity exactly in line with policies and procedures applied by the relevant person, since guidance in Section 4 provides that there are different ways in which to apply identification measures. Also, where the obliged person is outside Jersey, different requirements and guidance will be applicable.
Where an obliged person meets the requirements outlined in AML/CFT procedures, a relevant person is permitted to place reliance on the obliged person to have found out the identity and to have obtained evidence of the identity of: (i) the relevant person’s customer; (ii) any beneficial owner or controller of that customer; (iii) any third party for which that customer is acting; (iv) any beneficial owner or controller of a third party for whom that customer is acting; and/or (v) any person purporting to act on behalf of that customer.
It is not possible to place reliance on an obliged person to obtain information on the purpose and intended nature of a business relationship or one-off transaction, nor to apply on-going monitoring during a business relationship.
Further, AML/CFT procedures cannot be applied in any case where a relevant person suspects money laundering or financing of terrorism, in any case where a relevant person considers that there is a higher risk of money laundering or financing of terrorism on the basis of a risk assessment carried out under AML/CFT procedures, or where the obliged person has a relevant connection to a country or territory that is subject to a FATF call to apply enhanced CDD measures (see XXXX).
Whilst the information on identity found out by the obliged person must be provided to the relevant person immediately before establishing a relationship or carrying out a one-off transaction, a relevant person is not also required to immediately obtain evidence of identity. Evidence of identity may be held by an obliged person, so long as the relevant person is satisfied that the obliged person will provide the evidence that it holds on request and without delay. However, it is not uncommon for evidence of identity to be called for at the same time as information on identity is provided by the obliged person.
Inter alia, an obliged person may be:
An investment advisor who arranges for a customer to invest in a financial product provided by a relevant person, where the investment is to be held in the name of the customer and not that of the investment advisor.
A trust and company services provider who establishes a bank or investment account for a client company, trust or foundation.
A relevant person will remain responsible for the satisfactory performance of all elements of identification measures. However, where the measures taken by a relevant person are reasonable, it will have a defence should the obliged person fail to have performed satisfactory measures.
Outsourcing arrangements are not included within the scope of this section, as these are distinct from circumstances in which reliance is placed on an obliged person. In an outsourcing arrangement, the customer will have a direct relationship with a relevant person and not with the delegate carrying on the outsourced activity. Although the delegate may have substantial contact with the customer, the customer is a customer of the relevant person and not of the delegate. The delegate will be carrying on the outsourced activity for the relevant person according to the terms of a contract with the relevant person. An example of a typical outsourcing arrangement is where a trustee of a collective investment fund outsources the management of the fund to an external party.
Where information on identity found out or evidence of that identity is passed by an obliged person to a relevant person in order to comply with requirements to counter money laundering and the financing of terrorism, the AML/CFT procedures restrict the use of the information to that purpose, except where another condition for processing personal data applies.
A customer may be an individual (or group of individuals) or legal person.
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