| Moving
money around the world? That’s fine but who are you? |
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| It seems
that it is impossible to move these days without someone wanting a proof
of ID. If you want a credit card or to open a bank account or book
a flight or even to open a facility with your local video shop; all of
these actions will be met with a request for proof that you are who you
say you are and you live at the address that you claim is your home. |
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| It’s
enough to make anyone paranoid and almost everybody feels a twinge of nervousness
when someone in authority questions them but we have all just about come
to accept the annoyance and hassle with a resignation that comes from having
been through the drill enough times for it to be routine. In fact the only
time I have ever known anyone to be happy to have their ID checked is when
my daughter went to the bar to buy alcohol on her 18th birthday and was
asked for her ID. She could barely contain her delight as she scrabbled
in her purse and produced her drivers licence and she grinned all the way
back to our table to recount the story verbatim. |
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| These
odd moments aside and despite the hassle and delay, it is important
to remember that when you are standing at the counter while the guy behind
the desk photocopies your passport, this extra bureaucracy also drives
him and his company to distraction. They are merely complying with rules
and regulations designed to protect them from being inadvertently caught
up in illegal activity. |
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| The problem
is that the police, customs and other regulatory authorities demand
increasing levels of proof of identity; forcing those who deal with members
of the public to become ever more vigilant. |
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| When it comes
to moving funds around the globe, even more concerns are raised by the
authorities because the incidence of money laundering is surprisingly common. |
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| Until 1989,
money laundering was generally thought of as the act of disguising the
proceeds of crime to provide them with a clean trail and removing their
association with the criminals. To most people, the mention of money laundering
is met with a knowing look and a comment that alludes to the drug trafficking
world. That is not surprising considering the huge sums of hard cash that
were derived from the drugs business and exchanged for other currencies
before being transmitted around the globe to hide their origin. |
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| Naturally,
most governments had an interest in clamping down on the movement of these
sums in order to restrict the activities of the drug smugglers. |
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| The definitions
changed in 1989 when the anti-money laundering regulations broadened their
focus to include the funding of terrorist activity and at this point, the
proof of ID demands increased considerably. The term ‘know your client’
was always a sales phrase designed to ensure salesmen understood the needs
and desires of their customers but after 1989 ‘KYC’ became the focal
point of the financial services industries around the globe. Knowing
your client has now taken on a new meaning and it is literally the act
of knowing before any transaction can take place that a client is in fact
the person they purport to be. This means that everyone has to be screened
to ensure they are bona fide and not involved in illegal activity. |
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| The currency
market is an obvious place for the authorities to focus on. Changing
the nature and name of the funds you want to hide is simplest if the money
is moved to another country or even changes continents and is converted
into another currency. |
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| Understandably,
the foreign exchange industry is very well drilled in anti-money laundering
procedures and every company involved in the exchange and transmission
of funds is required to work very closely with the relevant authorities. |
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| So when
you want to establish an arrangement with a currency dealer to exchange
your funds into another currency and transmit them to another country,
as odd as it sounds, you should actually welcome the fact that your identity
is being verified. As well as agreeing to the terms and conditions of the
chosen currency company, you will have to provide two forms of ID that
prove your name and link you to your home address. This link is the reason
that utility bills are preferred to mobile phone bills. |
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| This identity
verification is done as much for your protection as it is for the protection
of the company you have chosen to do business with. It may be a hassle
but is certainly worth a few minutes of your time to make sure your funds
are not at risk and that you are doing business with a reputable dealer. |
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| The failure
by any currency company to collect correct ID information is viewed
very dimly by the regulatory authorities who, if at all suspicious of the
practices of any financial services company, have the authority to freeze
the company’s assets as well as any funds they may be holding for their
clients. |
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| For your
part, you should be very wary of doing business with any currency dealer
who does not ask you for proof of your identity before allowing you to
use their services to transmit or exchange funds. Currency companies are
required by law to gain and retain this information before doing business
and so if you are accepted as a client without the company in question
asking for any ID documents, you would do well to seek an alternative supplier
for your currency needs. |
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| I can only
guess at the hassle that would come from having all your worldly wealth
tied up in a frozen bank account while you argue the case to have the funds
released. |
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| I should
make the very important point that all currency transmitters in the UK
have to be registered with Her Majesty’s Revenue and Customs department;
meaning their activities are monitored and that they receive regular inspections
and advice on the regulations and their changing applications. So the chances
of a rogue dealer are pretty unlikely but you owe it to yourself to make
sure you are doing business with a company that protects you as well as
itself from rogue elements. |
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| Migrants
and those buying property overseas will usually only need to provide these
details once but, if you are making regular large payments over a lengthy
period, you should be asked to renew your ID documents. The currency company
is required to keep records up to date and they will usually ask for new
documents after 12 months or sooner if, for example, your passport expires
before you want to execute a transaction. This is as much a matter
of avoiding identity fraud as it is about anti money laundering rules. |
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| So it isn’t
that you look untrustworthy or that your money has the whiff of a drug
smuggler; these companies have no option other than to ask you for
your ID and they need to satisfy themselves that even if your passport
makes you look like a convict, your address matches, the signature matches
and the photo looks like you. |
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| It is part
of the anti money laundering framework that dominates the financial markets
in every country and, whatever we think of the hassle, it has become
a way of life in the financial markets. |
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| I’m Sophie
Stride by the way and I can prove it. |
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