What does this really mean?

Following consultation with the FSA and having been given direction and requirements from some of the six banks, Experian has defined what the initiative means, and where the areas of flexibility exist.

Definition of customers to be reviewed
It is important that each organisation can define what is a current customer as there is little point in re-identifying those identities that no longer have a real relationship.

When does the initiative have to be complete?

For the 6 banks, the requirements state that:

• High risk customers need to be completed by Summer 2003

• Medium risk customers need to be completed by Summer 2004

• Low risk by the end of 2004 (but slippage to August 2005 is acceptable)

The definition of high, medium and low risk is contained in Appendix 1.
For other firms, they will probably be expected to re-identify their high-risk customers within a year of submitting their plans, and medium and low risks customers a year hence respectively.

What level of identification is required?
The guidelines give a reasonably flexible approach to defining what actually constitutes a re-identification. As the main objective is to eliminate money laundering and fraudulent activity, the main priority is to undertake the exercise with the higher risk customers first and to a higher level of identity confirmation. The FSA guidelines state the definition of what are high, medium and low risk and the time frame in which the exercise needs to be complete. Details are contained within Appendix 1.

This is likely to be the area of most consideration in the planning phase of the project. Understanding the need for thoroughness of identification for your own surety together with meeting the requirements of the guidelines, needs to be balanced against the cost and practicality of the approaches available. It is likely therefore that a number of options will have to be considered in detail. It is expected that many customers will need to be re-identified with no more than a single confirmation of identity or address. However, the number or intensity of checks the FSA expect the firm to re-complete will depend on other factors – such as the risks associated with the customer. The work that Experian has conducted with a number of organisations to date has identified that one fixed approach will not be appropriate for every organisation.

Ensure your proposals are acceptable with the FSA
You are being asked to work with your FSA Supervisory team to seek approval that your plan to undertake the initiative meets the requirements and is undertaken within a reasonable time frame.

Experian will be very happy to support you with your meetings as required. This could be in the form of providing documentary evidence or providing supporting materials to explain your preferred approach. In some cases we attend meetings with customers to assist with the detailed explanation of how they plan to undertake their project.