CHAPTER 4

CUSTOMER IDENTIFICATION

Section 4.A.  General

Section 4.A.1. Regulated Intermediaries shall obtain satisfactory evidence of the true and full identity, representative capacity, domicile, legal apacity, occupation or business purposes of clients, as well as other identifying information on those clients, whether they be occasional or usual, through the use of documents such as, but not limited to:

a.   identity documents, such as passports, birth certificates,  driver’s licenses, employment identification cards, and other similar identity documents, which are verifiable from the institution issuing the same;

The identifying documents should provide evidence of true name or names used, permanent address, date of birth, nationality, and office address.  They should include at least one bearing a photograph and be pre-signed. The identifying documents which are considered most reliable are official identity cards and passports.  While identification documents that are easily obtained in any name, e.g., medical cards, credit cards and student identification cards may be used, they should not be accepted as the sole means of identification.

b.   incorporation and partnership papers, for corporate accounts. These documents should be certified as true copies from the issuing government agency.

c.   special authorizations for representatives, which must be duly notarized.

d.   other pertinent and reasonable documents as may be deemed necessary under the prevailing circumstances

Section 4.A.2. Clients should be made aware of Regulated Intermediaries’ explicit policy that business transactions will not be conducted with applicants who fail to provide evidence of their identity, but without derogating from the Regulated Intermediaries' obligations to report suspicious transactions. Where initial checks fail to identify the applicant, or give rise to suspicions that the information provided is false, additional verification measures should be undertaken to determine whether to proceed with the business. Details of the additional checks are to be recorded.

Section 4.A.3. When a Regulated Intermediary acquires the business of another financial sector company or covered institution , either in whole or as a product portfolio, it is not necessary for the identity of all existing customers to be re-identified, provided that:

i.    all customer account records are acquired with the business; and

ii.   due diligence inquiries do not raise any doubt as to whether the anti-money laundering procedures previously adopted by the acquired business have satisfied Philippine requirements.

Section 4.A.4. If during the business relationship, the Regulated Intermediary has reason to doubt:

i.     the accuracy of the information relating to the customer's identity;

ii.    that the customer is the beneficial owner; or

iii.   the intermediary's declaration of beneficial ownership, or

iv.   if there are any signs of unreported changes,

Said Regulated Intermediary shall take further measures to verify the identity of the customer or the beneficial owner, as applicable.   Such measures may include the following:

a.    referral of names and other identifying information to  criminal investigating authorities

b.    review of disciplinary history and disclosure of past relevant sanctions

Section 4.A.5.  Regulated Intermediaries shall maintain accounts only in the name of the account holder.  They shall not open or keep anonymous accounts, fictitious names accounts, incorrect name accounts and similar accounts. 

SRC Rule 52.1-6 (Customer Account Information Rule), which requires brokers and dealers to get specific personal and business information from clients, continues to remain in full force and effect.

Section 4.B. Personal Customers

Section 4.B.1 Regulated Intermediaries shall obtain from all personal applicants the following information:

• name and/or names used;

• present address

• permanent address;

• mailing address;

• date and place of birth;

• nationality;

• nature of work, name of employer or nature of self-employment or business;

• tax identification numbers, Social Security number or Government Service and Insurance System number;

• specimen signature;

• sources of funds.

Section 4.B.2. Regulated Intermediaries shall request applicants who present only photocopies of identifications and other documents to produce the original documents for verification purposes.

Section 4.B.3. Verification Without Face-to-Face Contact. –

(a)  Whenever possible, prospective clients should be interviewed personally.

(b)  Regulated Intermediaries shall take particular care in opening accounts via the Internet, post or telephone or other such instances which may give rise to verification without face-to-face contact.

(c)  The customer identification procedures for non-face-to-face verification should be as stringent as those for face-to-face verification. Regulated Intermediaries are duty-bound to inform such clients that identity verification measures apply as well to them.

(d)  The following are a number of checks which can be used by Regulated Intermediaries to verify identity of prospective clients where there is no fact-to-face contact:

• telephone contact with the applicant at an independently verified home or business number;

• subject to the applicant's consent, telephone confirmation of the applicant's employment with the employer's personnel department at a listed business number;

• salary details appearing on recent bank statements, Income tax returns or any other document evidencing compensation;

• confirmation of the address through an exchange of correspondence or by other appropriate methods.

An initial deposit check drawn on another financial institution regulated by the Bangko Sentral ng Pilipinas will provide additional comfort.

(e)  For non-Philippine residents who wish to open accounts without face-to-face contact, documents as enumerated in Section 4.A.1 issued by foreign authorities may be submitted, duly authenticated by the Philippine Consulate where such foreign authorities are located. Regulated Intermediaries shall, however, inform the clients of the provisions of Section 4.A.2.

(f)  No new accounts shall be opened and created without face-to-face contact unless full compliance with the requirements of Section 4.B.1 and 4.B.2 are met.

Section 4.C. Corporations, Stock or Non-Stock and Partnerships

Section 4.C.1 Before establishing a business relationship, a company search and/or other commercial inquiries shall be made to ensure that the corporate/other business applicant has not been, or is not in the process of being dissolved, struck off, wound-up or terminated. In the event of doubt as to the identity of the company or its directors, or the business or its partners, a search or inquiry with the Commission or the relevant Supervising Authority/Regulatory Agency shall be made.

Section 4.C.2. The following relevant documents shall be obtained in respect of corporate/other business applicants which are Regulated in the Philippines

• Copies of the Certificate of Registration, including Articles of Incorporation or Certificate of Partnership, as appropriate, copies of the By-Laws and Latest General Information Sheet, which lists the names of directors/partners and principal stockholders, and secondary licenses.

  The originals or certified copies of any or all of the foregoing documents, where required, should be produced for verification.

• Sworn statement as to existence or non-existence of beneficial owners.

• Appropriate directors' resolutions and signed application forms or account opening authority containing specimen signatures;

• Where necessary, Regulated Intermediaries may also require additional information about the nature of the business of clients, copies of identification documents of shareholders, directors, officers and all authorized signatories;

Section 4.C.3. For companies, businesses or partnerships registered outside the Philippines, comparable documents are to be obtained, duly authenticated by the Philippine Consulate where said companies are located.

Section 4.C.4. If significant changes to the company structure or ownership occur subsequently, or suspicions are aroused by a change in the payment profile through a company account, further checks are to be made on the identities of the new owners.

Section 4.D. Shell Companies

Section 4.D.1. Shell companies are legal entities which have no business substance in their own right but through which financial transactions may be conducted. Regulated Intermediaries should note that shell companies may be abused by money launderers and therefore be cautious in their dealings with them.

Section 4.D.2. In addition to the requirement under Section 4.C.2., Regulated Intermediaries should also obtain a Board of Directors’ Certification as to the purposes of the owners in purchasing the shell company. There must likewise be satisfactory evidence of the identities of the beneficial owners, bearing in mind the "Know-Your-Customer" principle.

Section 4.E.  Trust, Nominee and Fiduciary Accounts

Section 4.E.1. Regulated Intermediaries shall establish whether the applicant for business relationship is acting on behalf of another person as trustee, nominee or agent. Regulated Intermediaries should obtain satisfactory evidence of the identity of such agents and authorized signatories, and the nature of their trustee or nominee capacity and duties.

Section 4.E.2.  Where the Regulated Intermediary entertains doubts as to whether the trustee, nominee or agent is being used as a dummy in circumvention of existing laws, it shall immediately make further inquiries to verify the status of the business relationship between the parties. If satisfactory evidence of the beneficial owners cannot be obtained, Regulated Intermediaries shall consider whether to proceed with the business, bearing in mind the "Know-Your-Customer" principle. If they decide to proceed, they are to record any misgiving and give extra attention to monitoring the account in question.

Section 4.E.3. Where the account is opened by a firm of lawyers or accountants, the Regulated Intermediary should not be precluded from making reasonable inquiries about transactions passing through the subject accounts that give cause for concern or from reporting those transactions if any suspicion is aroused. If a money laundering Suspicious Transaction Report is made to the Council in respect of such clients' accounts, the Council will seek information directly from the lawyers or accountants as to the identity of its client and the nature of the relevant transaction, in accordance with the powers granted to it under the Act and other pertinent laws.

Section 4.F. Transactions Undertaken on Behalf of Account Holders or Non-Account Holders

Section 4.F.1.  Where transactions are undertaken on behalf of account holders of a Regulated Intermediary, particular care shall be taken to ensure that the person giving instructions is authorized to do so by the account holder.

Section 4.F.2.  Transactions undertaken for non-account holders demand special care and vigilance.  Where the transaction involves significant amounts, the customer should be asked to produce positive evidence of identity including nationality, especially in cases where the client is not a Filipino, the purposes of the transaction and the sources of the funds.

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