General Guide to Account Opening and Customer Identification

February 2003

Attachment to Basel Committee publication No. 85 "Customer due diligence for banks"

1. The Basel Committee on Banking Supervision in its paper on Customer Due Diligence for Banks published in October 2001 referred to the intention of the Working Group on Cross-border Banking 1 to develop guidance on customer identification. Customer identification is an essential element of an effective customer due diligence programme which banks need to put in place to guard against reputational, operational, legal and concentration risks. It is also necessary in order to comply with anti-money laundering legal requirements and a prerequisite for the identification of bank accounts related to terrorism.

2. What follows is account opening and customer identification guidelines and a general guide to good practice based on the principles of the Basel Committee's Customer due diligence for banks paper. This document, which has been developed by the Working Group on Cross-border Banking, does not cover every eventuality, but instead focuses on some of the mechanisms that banks can use in developing an effective customer identification programme.

3. These guidelines represent a starting point for supervisors and banks in the area of customer identification. This document does not address the other elements of the Customer Due Diligence for banks paper, such as the ongoing monitoring of accounts. However, these elements should be considered in the development of effective customer due diligence, anti-money laundering and combating the financing of terrorism procedures.

4. These guidelines may be adapted for use by national supervisors who are seeking to develop or enhance customer identification programmes. However, supervisors should recognize that any customer identification programme should reflect the different types of customers (individual vs. institution) and the different levels of risk resulting from a customer's relationship with a bank. Higher risk transactions and relationships, such as those with politically exposed persons or organisations, will clearly require greater scrutiny than lower risk transactions and accounts.

5. Guidelines and best practices created by national supervisors should also reflect the various types of transactions that are most prevalent in the national banking system. For example, non-face-to-face opening of accounts may be more prevalent in one country than another. For this reason the customer identification procedures may differ between countries.

6. Some identification documents are more vulnerable to fraud than others. For those that are most susceptible to fraud, or where there is uncertainty concerning the validity of the document(s) presented, the bank should verify the information provided by the customer through additional inquiries or other sources of information.

7. Customer identification documents should be retained for at least five years after an account is closed. All financial transaction records should be retained for at least five years after the transaction has taken place.

8. These guidelines are divided into two sections covering different aspects of customer identification. Section A describes what types of information should be collected and verified for natural persons seeking to open accounts or perform transactions. Section B describes what types of information should be collected and verified for institutions and is in two parts, the first relating to corporate vehicles and the second to other types of institutions.

9. All the terms used in these guidelines have the same meaning as in the Customer due diligence for banks paper.

A. Natural Persons

10. For natural persons the following information should be obtained, where applicable:

11. The bank should verify this information by at least one of the following methods:

12. The examples quoted above are not the only possibilities. In particular jurisdictions there may be other documents of an equivalent nature which may be produced as satisfactory evidence of customers' identity.

13. Financial institutions should apply equally effective customer identification procedures for non-face-to-face customers as for those available for interview.

14. From the information provided in paragraph 10, financial institutions should be able to make an initial assessment of a customer's risk profile. Particular attention needs to be focused on those customers identified thereby as having a higher risk profile and additional inquiries made or information obtained in respect of those customers to include the following: