What are some major KYC Document Verification Requirements in the UK

The United Kingdom has a multi-faceted regulatory framework in the context of KYC (Know Your Customer) and AML (Anti-Money Laundering). The primary motive of this framework is to prevent financial crimes like money laundering by the implementation of KYC procedures in financial institutions and other regulated firms. This blog discusses the KYC Document Verification Requirements in the United Kingdom and the latest insights on the regulatory landscape, technologies, and best practices for compliance in identity verification through documents.

Overview of KYC Document Verification

KYC Document Verification is a process of verifying the customer’s identity through identifiable documents that are owned by the customer. It is mostly done by verifying Identity documents that include a variety of government-issued or privately owned documents.

KYC and AML Regulatory Framework of the UK

For KYC regulations, the Financial Conduct Authority (FCA) is directly responsible for ensuring that firms are conducting business and managing risks in association and compliance with the KYC and AML laws. It sets requirements for KYC including the following:

• Customer Due Diligence (CDD)
• Enhanced Due Diligence (EDD)
• Record Keeping
• Risk Assessment
• Ongoing Monitoring
• Suspicious Activity Reporting (SAR)

Moreover, FCA ensures that firms are playing their part in preventing and combatting financial crimes.

No, we shall discuss the UK’s major requirements for KYC Document Verification.

Required Documents in KYC Identity Verification

Relating to our previous blog Documents Required for KYC Identity Verification in MSBs, the following infographic explains the complete list of documents required for KYC Verification in the UK.

In the UK, National ID Cards were scrapped as of 2011. Now the main proof of Identity in the UK is a passport. Here is a list of identity documents that are required to use financial services like banks in the UK.

Proof of Identity (PoI):

• United Kingdom Passport: A valid UK Passport is required for identification purposes and KYC.
• Driving License: The UK driving license, issued by the Driver and Vehicle Licensing Agency (DVLA) also proves the identifiable information of the relevant person.
• Biometric Residence Permit (BRP): Non-EEA nationals residing in the UK may hold a Biometric Residence Permit, which includes biometric information and serves as proof of their right to stay in the country.
• EU Settlement Scheme (EUSS) Card: EU, EEA, or Swiss citizens residing in the UK under the EU Settlement Scheme may have a residence card as proof of their immigration status.

Proof of Address (PoA)

• Utility Bills: Three to Six Months Old.
• Bank Statements: within the last three months from another bank where the customer holds an account.
• Council Tax Bill: A valid council tax bill showing the residential address.
• Tenancy/ Rent Agreement: A signed and dated tenancy/ rent agreement for the present address verification.
• Mortgage Statement: A recent mortgage statement for a property owner.
• Official Letters: Government-issued letters or official documents such as letters from HM Revenue & Customs (HMRC) or the Department for Work and Pensions (DWP).

Proof of Income:

• Payslips: Recent payslips from an employer (last three to six months).
• Employment Contract: A copy of the employment contract showing gross salary.
• Tax Documents: HM Revenue & Customs (HMRC) tax calculations or tax overviews.
• Bank Statements: Bank statements showing regular income deposits.
• Pension Statements: Statements from pension providers for individuals receiving pension income.
• Letter from Employer: A letter from the employer confirming an employee’s income.
• Self-Employment Documents: For self-employed individuals, business accounts, tax returns, or other business-related documents.
• Rental Income Documents: For individuals with rental income, documents such as rental agreements or bank statements showing rental deposits.
• Benefits Statements: Statements or letters confirming receipt of benefits.

Transaction Documents:

• Bank Statements: Recent bank statements (three to six months old)
• Transaction History: Detailed transaction history showing income, expenses, and other financial activities.
• Proof of Payment: Receipts of payments for specific transactions showing larger or irregular payments.
• Invoices: Invoices of business activities.
• Cheque Images: Copies of cheques written or received.

GDPR Compliance

General Data Protection Regulation is also applicable in the context of protecting the customer’s data which is collected while implementing KYC procedures. After Brexit, the United Kingdom incorporated the GDPR into its law as the UK GDPR. it took effect in January 2021. Organizations working in the UK are obliged to implement GDPR in their workplaces. For KYC Document Verification, GDPR significantly impacts the data collection and data processing part.

Here are the key aspects of GDPR’s relevance to KYC data collection:

Electronic Identity Verification (eIDV)

FCA encourages the digitization of KYC and Identity Verification. For this purpose, organizations should implement a strong electronic Identity Verification mechanism in their approach to KYC. This concept is also referred to as Digital Identity verification.

KYC and IDV in the UK

Know Your Customer (KYC) and Identity Verification are closely related and highly important in financial institutions. Customers are required to go through the KYC onboarding process to verify their identity at banks and financial institutions. In the United Kingdom, Identity verification for opening up a bank account or using any other financial service is a legal requirement. Moreover, regulators like the FCA, HMRC, PRA, and NCA enforce and overlook the implementation of strong KYC and AML systems in fintech firms in the UK.

There’s a difference between an individual’s and a corporate client’s KYC such as

Person of Significant Control (PSC) Data

In the UK, an Ultimate Beneficial Owner (UBO) is called a Person of Significant Control (PSC).  If any alteration in a company takes place, the company must report the updated PSC Information to the UK’s registry and company house including the following information:

• Name
• Date of birth
• Nationality
• Usual residential address
• Service address
• Type of PSC conditions
• The date they became a PSC

The Role of KYC Solution Providers in Identity Document Verification

KYC Solution Providers act as a backbone of the Document Identity Verification system in any financial institution. They make it possible for banks to stay compliant with AML laws and operate securely in a legal environment. UK banks and other financial institutions need to have a strong KYC system in place. For this purpose guidance in choosing the best-suited KYC system is mandatory.

KYC AML Guide directs your business to stay compliant and avoid the cost of an erroneous decision that can result in fines, reputational damage, and customer churn. While buying the services of a KYC Solution, you need solid information on how well the KYC Vendor is going to meet your customer onboarding requirements. Book your KYC Technology Buying Consultancy with us and harness 100% value of your invested money in a KYC solution.