102760 – Due Diligence: Pre-Existing Individual Accounts: Lower Value Accounts: Residence Address Based on Documentary Evidence

Financial institutions are generally required to carry out due diligence checks, often referred to as AML/KYC procedures, on their customers in respect of anti-money laundering regulations. These checks are based on the Financial Action Task Force (FATF) recommendations that have been incorporated into the UK Money Laundering Regulations which in turn require the financial institution to verify the customer’s identity based on documents, data or information obtained from a reliable and independent source. The types of document that meet this requirement are those included in the definition of Documentary Evidence in the DAC/CRS.

Consequently, where a financial institution has identified the residence address of an Account Holder by following the policies and procedures it has in place for AML/KYC procedures the financial institution may rely on that address when applying the residence address test.

The current FATF recommendations have been effective since 2004 thus Account Holders that have been subject to AML/KYC processes since then are in scope for this treatment.

For accounts opened before 2004 the policies and procedures that the financial institution has in place must ensure that the current residence address they hold is in the same jurisdiction:

i. As that of the address on the most recent documentation collected by the financial institution, for example, a utility bill, a real property lease or a declaration by the Account Holder made under penalty of perjury; and

ii. As that reported by the financial institution on the Account Holder under any other applicable tax reporting requirements (if any).

Alternatively, in the case of a Cash Value Insurance Contract the financial institution may rely on the current residence address in its records until:

i. There is a change in circumstances that causes the financial institution to know or have reason to know that the address held is incorrect or unreliable, or

ii. The time of pay-out, whether full or partial, or maturity of the contract. The pay-out or maturity of the contract will trigger a change of circumstances requiring the financial institution to update its records.

In the event that a financial institution has been notified of a change of address by the Account Holder, supported by documentation from the Account Holder, and this does not result in any further AML/KYC processes, the financial institution may still rely on the address that has been the subject of AML/KYC provided the new address is in the same jurisdiction.