The need to ‘know your customer’ applies right across business in the UK, although financial-type businesses, where large transactions occur, have a particularly stringent compliance regime. Once the data have been obtained, there is then a need to keep them safe, as theft or loss of such data makes identity theft relatively straightforward.
Failure to comply with anti-money laundering regulations can lead to severe penalties, as a recent example shows.
The case involved a ‘payday loan’ company, which was fined more than £1/2 million and had its consumer credit licence revoked because it failed to have robust enough systems to identify that more than 7,000 loans it had made were fraudulent. The fraudsters involved had engaged in identity theft and because the company’s identity vetting systems were inadequate they were able to obtain the loans.
The company was also criticised for chasing repayment from alleged borrowers who it had good reason to believe were not the true borrowers, but indirect victims of the scam.
For guidance on the money laundering regulations that apply to you, look at the HMRC website.