Identification is one of the general due diligence requirements under applicable anti-money laundering laws. The core content of these duties is stipulated in Section 1 para. 3 German Anti-Money Laundering Act (AMLA). The details of identification are set out in Sections 11 – 13 AMLA.
Who needs to be identified?
Pursuant to Section 11 para. 1 sentence 1 AMLA, obliged persons must identify the following under applicable anti-money laundering laws
- (1) their contractual partner,
- (2) where applicable, a person acting on behalf of the contracting party, and
- (3) the beneficial owner.
When do identity checks need to be carried out?
The “triggers” of the obligation to carry out identity checks are set out in Section 10 para. 3 AMLA. In accordance with this provision, obliged persons must carry out identity checks
- (1) when establishing a business relationship;
- (2) outside of a business relationship in the case of transfers of funds within the meaning of Regulation (EU) 2015/847 of the European Parliament and of the Council of 20 May 2015 on information accompanying transfers of funds (OJ L 141, p. 1), from and above 1,000 euros and in the case of other transactions from and above 15,000 euros;
- (3) in case there is a suspicion of money laundering or terrorism financing.
How to identify?
The identification process consists of two steps which must be strictly separated:
- establishing the relevant person’s identity by collecting information; and
- verification of the identity by verifying the information collected.
With regard to the type of information that needs to be collected and the type of verification, a distinction must be made between the identification of the contractual partner on the one hand and any person acting on its behalf and, on the other hand, the identification of the beneficial owner.
Identification of the contractual partner and, if applicable, the person acting on its behalf
What type of information the obliged person has to collect in this first step depends on whether the subject of the identification process is a natural person or a legal entity or partnership.
In the case of a natural person, among other things, the first name, surname and place of birth must be ascertained. In the case of a legal person or a partnership, among other things, the company name, the name or the designation as well as the legal form must be recorded. Further details are provided in Section 11 para. 4 AMLA.
As part of the second step, the obliged person must then check whether the information provided is accurate. The required level of verification is governed by Section 12 AMLA. For example, in the case of the identification of a natural person, the information provided can be verified on the basis of a valid official document of identification (Section 12 para. 1 S. 1 AMLA). In the case of legal entities or partnerships, the information provided can be verified, for example, by comparing it to an extract from the commercial register (S. 12 para. 2 No. 1 AMLA).
The verification of the identity may be carried out either on site by presenting, for example, the identity document or by means of another procedure which is suitable for carrying out the required identity checks under applicable anti-money laundering laws and which has a level of security equivalent to the procedure stated in no. 1. The latter includes the video identification procedure (only for natural persons).
Identification of the beneficial owner
With regard to beneficial owners, the obliged person has to ascertain at least the name of any beneficial owner to establish their identity and, if there appears to be a risk of money laundering or terrorism financing in an individual case, they must also record further identification details. The beneficial owner’s date and place of birth as well as the address may be ascertained irrespective of any identified risk. The obliged person must then carry out the verification of the information provided using measures that are appropriate with respect to the level of risk involved; they may not rely exclusively on the information contained in the transparency register.