Exception handling process

A reporting entity choosing to rely on the IVCOP for identity verification of customers (that are natural persons) assessed by the reporting entity to be high risk, must have appropriate exception handling procedures in place.

The IVCOP prescribes the different types of documents a reporting entity may use to undertake verification of customers’ identity. However, there will always be some customers (for example the young, or the very old) who don’t have the required identification documents. The exception handling policy, procedures, and controls enable a reporting entity to deal with such circumstances.

It is important to remember exceptions are just that – they should not turn into normal business practice. As an example, exception handling should only be used where the person genuinely does not hold the identification documents, not where they have just left them at home.

Example of Exception Handling section from an AML/CFT programme

An exception occurs when an existing customer, or a potential new customer, is unable to provide the identity verification documents prescribed by the Amended Identity Verification Code of Practice.

Policy

Customers not in a position to provide identity documents, prescribed by the IVCOP will only be on-boarded on a case- by-case basis and with the approval of the AML/CFT compliance officer.

Procedure

The AML/CFT compliance officer has prescribed alternative documents for identity verification purposes when a customer cannot supply identity documents as prescribed by the IVCOP. The alternative documents are:

  1. For persons under 18 years of age, a birth certificate or a student identity card.
  2. For persons over 18 years of age, who are unable to produce a primary photographic identification, the acceptable document is a passport size photograph of the customer along with an Identifier Statement from a person who has known the customer for a minimum period of 12 months before the date of on-boarding. In addition, the identity of the Identifier should be verified using the documents prescribed by the IVCOP.

Staff undertaking identity verification by such means, must make a record of the reasons for making the exception, and retain it on the customer’s file.

In the event the customer is unable to supply the documents described in a , or b, then the customer must not be on-boarded, and the AML/CFT compliance officer must be informed.

Control

At the end of each month the AML/CFT compliance officer undertakes a review of new customers’ files to ascertain if any customer was on-boarded by making an exception to our standard procedure of only obtaining identification documents prescribed by the IVCOP. This check reveals if the exception handling procedure was correctly followed at the time of on-boarding.

If this check reveals the exception handling procedure was not correctly followed then additional training is provided by the AML/CFT compliance officer to the relevant staff member.

For more information, contact the helpful AML team at Strategi.