When are identification procedures not required under MLR?

Identification procedures under the Money Laundering Regulations (MLR) are primarily aimed at preventing money laundering and ensuring that firms know their customers. In specific situations, these identification procedures may not be needed, and one such situation is when the introduction comes from a UK authorized firm.

When a client is introduced to a financial service provider by a firm that is already regulated and authorized in the UK, it is assumed that the introducing firm has performed its own due diligence on the client. Therefore, the receiving firm does not have to carry out further identification checks for that client. This is based on the understanding that such authorized firms are subject to rigorous supervisory standards and are responsible for ensuring compliance with the regulations.

In contrast, transactions of €15,000 or more typically require identification procedures due to the potential risk of money laundering. Similarly, introductions from foreign entities often lack the same regulatory oversight as UK firms, necessitating additional checks. Transactions conducted by public authorities do have specific rules, but they still fall under certain identification requirements in most cases. Thus, identification procedures being unnecessary for introductions from UK authorized firms highlights the trust placed on regulated entities under the MLR framework.