What are the AML procedures?
AML procedures help an entity recognise, prevent, and report money laundering activities.
They ensure that entities successfully manage the risks associated with money laundering and adhere to AML regulatory requirements.
AML procedures take care of the practical implementation of the AML/CFT policy.
These procedures involve KYC, sanctions screening, risk assessment, customer due diligence, reporting suspicious transactions, etc.
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As part of the CDD process, while onboarding a client, we obtain copies of the passport, trade license, etc. Is it fine to collect these identity documents as digital copies?
As part of the CDD process, it is important to identify the customer and verify their identity using documents/information available from reliable and independent sources, such as government-issued documents.
In the case of an individual (natural person) client, it is provided to verify the client’s original identity document and retain a copy thereof for record purposes. In exceptional cases, when the client cannot make the original document available for verification purposes, then the regulated entity must obtain a true copy of the document certified by lawyers, notaries, chartered accountants, police, etc.
However, a similar requirement for verifying the original document is not provided for corporate clients. Obtaining a valid identity document, such as a trade license, and verifying it with the corporate registry (if available) or through other sources is fine.
These documents may be presented to the regulated entity either in physical form or scanned copies of the same work.
To answer the question, for verification purposes, an official identification document issued by a competent authority in digital form (such as UAE Pass) can be very well accepted for identity verification purposes. While accepting the digital copies of the verification documents, the regulated entity must ensure that such documents are issued by the relevant authority in the digital form and that such copy is not manipulated. Additionally, the regulated entity must ensure that such digital copies serve the purpose of verification, i.e., they have all the relevant information that is generally mentioned in the document (that is not digitally generated).
Accordingly, for identity verification, the regulated entity may rely on physical copies, scanned copies or digitally-issued identity.