Dáil Éireann Debate, Wednesday - 16 June 2004
130 Mr. R. Bruton asked the Minister for Finance the details of regulations which apply to financial institutions including post office savings accounts regarding the proof of identity of the account holder; if he has satisfied himself that these requirements are not putting excessive obstacles in the way of young persons opening savings accounts; and if he will make a statement on the matter. [18098/04]
View answerSection 32 of the Criminal Justice Act 1994 requires financial institutions to take reasonable measures to identify their customers. Recommended procedures for the implementation of this provision are set out in guidance notes issued under the aegis of the money laundering steering committee, chaired by the Department of Finance and including representatives of financial services industry bodies, regulatory authorities and State agencies, including the Garda Síochána. The full text of the money laundering guidance notesfor credit institutions is available at http://www.finance.gov.ie/documents/publications/other/monlaun.rtf.
Identification of a customer comprises name verification, typically evidenced by a photograph-bearing document such as passport, driving licence or other reputable source document, and address verification. Paragraph 28 of the guidance notes states that any measures adopted by credit institutions should not deny a person access to financial services solely on the grounds that he or she does not possess certain specified identification documentation. Paragraph 45 of the guidance notes provides for those persons who cannot reasonably be expected to produce certain forms of identification, such as a person who does not have a passport or driving licence and/or whose name and Irish address does not appear on a utility bill, electoral register or directory. These alternatives include an identification form with photograph signed by a member of the Garda, documentation or cards issued by a Department showing the name of the person, a letter or statement from a person in a position of responsibility such as a solicitor, accountant, doctor, minister of religion, teacher, social worker or a community employment scheme supervisor, who is in a position to confirm the person's identity to the credit institution.
The EU savings directive, Council Directive 2003/48/EC of 3 June 2003, was transposed into Irish law by section 90 of, and Schedule 4 to, the Finance Act 2004 and also affects this matter. The directive provides for most EU member states to exchange information on the cross-border payment of interest to individuals resident in another member state. Austria, Belgium and Luxembourg will instead impose a withholding tax on such interest payments.
Although the directive reporting obligations will not apply until after 1 January 2005, it imposes certain new obligations on paying agents making or securing an interest payment for an individual to establish the identity and residence of individuals who enter into a relationship with them on or after 1 January 2004. The identity and residence rules under the directive operate on two levels. First, where a paying agent has an on-going contractual relationship with an individual on 31 December 2003, the identity and country of residence will be established on the basis of whatever information is in the paying agent's possession. Second, as respects new contractual relations entered into on or after 1 January 2004, paying agents are required to establish the identity, consisting of the individual's name, address and tax identification number. In the absence of a tax identification number, the individual's date and place of birth and residence, consisting of the country where the individual has his or her permanent address, of individuals to whom they may make an interest payment on the basis of specific rules derived from the directive. These rules require that identity and residence be established on the basis of a person's passport or official identity card. Where any of this information is not recorded on such documents, it is to be established using any other documentary proof of identity presented.
In implementing these rules contained in the directive, the Finance Act 2004 and the revenue guidance notes seek to be as flexible as possible in their approach so as to ensure that our obligations under the directive to provide information to other member states on interest payments made from Ireland to residents of those member states are fulfilled, while, at the same time, minimising the impact of the directive on both paying agents and those customers who would not be subject to the reporting requirements. To this end, the rules are applied in such a way so as to ensure that an Irish resident person who does not have a passport or an official identity card will be able to satisfy paying agents as to his or her identity and residence. In such cases, a current Irish driving licence or official documentation issued by the Revenue Commissioners or the Minister for Social and Family Affairs containing the person's name, address and personal public service number, which equates to a tax identification number in Ireland, are acceptable in the same way as an official identity card presented by a non-resident. In the case of Irish residents, including young persons who do not have any of the aforementioned documents, identity and residence may be established by reference to any photographic identification containing the person's name and address which is acceptable for money laundering purposes. In addition, parents who have their children added to their passports may use the information on the child in the passport as the basis for establishing identity. In such a case, residence may be taken to be that of the parent unless there is evidence to the contrary.
There is no requirement either in the directive or the Irish implementing legislation that identity and residence information be acquired at account opening time or that an account should not be opened in the absence of the required details. However, it is likely that paying agents would wish to ensure compliance with their money laundering requirements and their obligations under the savings directive at the same time on the opening of the account. Notwithstanding this, there is a requirement on paying agents to update their records where an individual's details change at any stage.
The purpose of these rules is to ensure that all customers of paying agents are correctly identified, along with their country of residence, so that when an interest payment is made to an individual who is resident in another EU member state, the details of the payment and the identity of the individual may be reported to the tax authorities in the appropriate member state. In order to minimise the opportunity for the misclassification of a non-resident as resident it is necessary that, broadly, the same rules apply to all customers of paying agents be they resident or non-resident.
