Question to the HM Treasury:

To ask the Chancellor of the Exchequer, what steps his Department takes to ensure that banks undertake adequate checks to identify and verify their customers' identity as required under legislation to prevent the opening of fraudulent accounts.

The Government takes fraud very seriously and we continue to work closely with industry to close down the vulnerabilities that fraudsters exploit and ensure members of the public have the information they need to spot a scam and stand up to fraudsters.

The FCA requires banks to maintain effective systems and controls to prevent the risk that they might be used to further financial crime. The Money Laundering, Terrorist Financing and Transfer of Funds (Information on the Payer) Regulations 2017 also set out the high-level requirements on regulated firms, such as banks, to combat financial crime and ensure that key professionals understand the purpose behind transactions, including the source of funds, and have policies, controls and procedures in place to mitigate against the risks of money laundering and terrorism financing they face.

Firms are also required by law to identify and verify their customer’s identity when they establish a business relationship, for example, by opening a bank account. How firms verify their customers' identities is not stipulated in law or by the regulator. For the financial institutions, firms are assisted in making such policies through the industry produced Joint Money Laundering Steering Group (JMLSG) guidance, which is approved by HM Treasury. Each firm will have their own policies on identification, and on the circumstances in which other checks should be undertaken. While the Government and Regulators do not prescribe those detailed policies, we are clear that firms should take appropriate action to ensure that the appropriate checks are conducted.