You are a company director and your bank is asking you to provide a copy of your partner’s identity document? To understand this process and its limits, it is necessary to review the legal framework behind such requests.
As part of their obligations relating to anti-money laundering and counter-terrorist financing (AML-CTF; Articles L561-1 to L561-50 of the French Monetary and Financial Code), credit institutions are required to identify their client and, where applicable, the “beneficial owner(s)” (L561-5 of the Monetary and Financial Code), before entering into a business relationship.
Indeed, since legal entities or nominees may be used to conceal the dubious origin of funds or their destination for criminal purposes, identifying the “beneficial owner” helps prevent the opacity of financial circuits.
The “beneficial owner” always refers to a natural person who may be either the person who directly or indirectly controls the client legal entity or a legal arrangement such as a trust, or the person on whose behalf a transaction is carried out (L561-2-2 of the Monetary and Financial Code).
Pursuant to Article L565-5-1 of the Monetary and Financial Code, credit institutions must update this information throughout the entire duration of the business relationship.
However, the verification of collected identification elements is carried out according to “appropriate measures” proportionate to the AML-CTF risk presented by the business relationship, in accordance with Article R561-7 of the Monetary and Financial Code.
According to the “Guidelines on identification, identity verification and customer due diligence” of the ACPR (section 105, page 24):
“Except in situations of high AML-CTF risk, and in the absence of any suspicion, financial institutions may verify the identity of the beneficial owner of legal entities and bodies listed in the French register and, where applicable, foreign registers maintained by public authorities, by collecting a registry extract”.
It is only in case of doubt regarding the identity of the beneficial owner that the institution is legitimately entitled to request a copy of an official identity document:
“The presentation of an official identity document and the collection of a copy thereof, which are not required in principle for the beneficial owner, may prove necessary in the event of doubt regarding the identity of the beneficial owner“.
“Guidelines on identification, identity verification and customer due diligence” of the ACPR (section 105, page 24)
At times, banking institutions exceed their prerogatives in the area of anti-money laundering and counter-terrorist financing out of excessive caution, in order to protect themselves.
It is then appropriate to remind them of the limits defined by the legal and regulatory framework, especially since in certain situations, the company may find itself practically unable to provide certain documents in a timely manner.
