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Identification Obligations in Public and Licensed Access Work

When can a barrister rely on ID checks carried out by an accessor on a lay client?

The Bar Council has advised barristers that when instructed by a solicitor they may rely on a letter or certificate from a UK solicitor stating that he has confirmed the lay client’s identity in accordance with regulation 4.  In what, if any, circumstances can a barrister rely on a similar assurance from an accessor who is not a solicitor?

The governing criterion is that the barrister must take reasonable measures.  This is likely to involve considering both the accessor and what he has actually done in the particular case.

As a general guide the Bar Council suggests that a barrister would be following a reasonable procedure in relying on an assurance from an accessor who is a member of a professional institution or who is authorised to practise in a field subject to statutory regulation where:-

(i) the structure, discipline and training of the profession or regulated group are such that barristers can feel confidence in its members’ performance of ID procedures;

(ii) “relevant business” is regularly undertaken by members of the profession or regulated group so that their familiarity with  ID procedures is likely to involve practical experience as well as theoretical knowledge.

In the remainder of this note a person fulfilling both those criteria is referred to as a “reliable professional”.

The Bar Council considers that amongst “reliable professionals” are likely to be members of the following groups:-

Chartered accountants1
Certified accountants
Insolvency practitioners2
Chartered surveyors3
Financial advisers authorised by the Financial Services Authority4

An assurance from a “reliable professional” might reasonably be relied on where:-

(a) The “reliable professional” is acting as an intermediary for a client, rather than instructing the barrister on his own behalf; and

(b) the assurance is to the effect that the “reliable professional’s” own ID checks have verified the identity of the lay client to the satisfaction of the “reliable professional” for the purpose of the 2003 Regulations.

Broadly speaking, therefore, a barrister may rely on an assurance from an accessor who is under the same duty to carry out ID checks pursuant to the 2003 Regulations as the barrister. 

Public access and licensed access clients who are not intermediaries

A barrister must normally carry out ID procedures on any client who instructs the barrister on his own behalf in relation to relevant business.  This is so even if the client is a member of a professional institute or regulated occupation.

However, in the case of established professions and persons authorised by the Financial Services Authority, the steps necessary to check identity may be quite simple.  For instance, if a barrister receives instructions on the printed letterhead of an independent financial adviser, whose name is found in the on-line FSA register at www.fsa.gov.uk/register/, no further check would normally be necessary.  Similarly if a barrister receives instructions on the printed letterhead of a chartered surveyor,  whose name is found in the RICS directory at http://dir.rics.org/.

In-house accessors

A barrister must normally carry out ID procedures on a lay client if he is instructed for “relevant business” by a professional who is an employee of the lay client – for instance, by an in-house accountant.  The Bar Council considers that a barrister cannot rely on an assurance from such professional that he has carried out ID procedures on his employer pursuant to regulation 4:  that is because such an employee is not under an obligation under the Regulations to perform ID on his employer.   

However, such a professional may quite properly provide to the barrister the materials which identify the employer, or direct the barrister to the simplest ID steps (e.g. providing the web page of a company’s listing on the AIM at the London Stock Exchange web site).  

A barrister receiving instructions from a professional or manager by a letter on the printed writing paper of a company  would not normally require any further evidence of the individual’s authority to act for the company.

The special position of banks and other regulated financial services firms

There is an exception to the normal requirement for ID procedures in the case of certain firms in the financial services sphere.  There is no requirement to carry out ID procedures where the barrister has reasonable grounds for believing that the lay client carries on business in the UK of a type specified in reg. 5(2).  The most commonly encountered clients within this exception are likely to be persons who are authorised under the Financial Services and Markets Act 2000 for the following activities:-

accepting deposits
dealing in, and arranging deals in, investments
managing investments
advising on investments

Long term insurance by a person authorised pursuant to art. s 4 or 51 of the Life Assurance Consolidation Directive.

This exception applies both when such an authorised firm instructs a barrister direct and when the instructions are received from an accessor acting as an intermediary.

Public corporations

There is no need for a barrister to carry out ID procedures on a publicly funded organisation.   Examples of bodies on which no ID procedures are necessary are: a police force, a probation service, the Crown Prosecution Service, a District Council.

Persons already known

There is no need for a barrister to carry out ID procedures on an individual who is already well known to him.  Good  personal knowledge of an individual may, indeed, be considered to be the best way of verifying an individual’s identity.

If a lay client is already well known to a “reliable professional”, and the assurance as to ID from the “reliable professional” is based on personal knowledge, a barrister may rely on this in the same way as he would rely on a “reliable professional’s” inspection of passport and the like.

Advising on contracts

Since public and licensed access work will often be non-contentious or pre-litigious work, the question may arise more frequently as to the boundary of “relevant business” in the context of contract advisory and drafting work. 

The Bar Council considers that the following are relevant business:-

Drafting a contract with a view to it being executed between known parties for a specific known transaction

Advising on the effect of a draft contract proposed to be executed between known parties for a specific known transaction

On the other hand, the Bar Council considers that the following are not “relevant business”:-

Advising on the effect of a contract which has already been executed.

Drafting a set of standard terms for a  business

Drafting a model form of contract to be published by a institution

Record keeping

Barristers should keep copies of documents which they inspect for the purpose of ID procedures.

In addition the Regulations contain requirements as to keeping records of transactions by way of “relevant business”.  But a barrister who complies with the normal public access requirements for record keeping will have done quite sufficient to comply with these Regulations.
 
1 By reg. 2(2)(i), (j), (k) relevant business includes tax advice and the provision of accountancy and audit services
2 By reg. 2(2)(h) relevant business includes the activities of an insolvency practitioner within s.388 Insolvency Act 1986
3 By reg. 2(2)(f) relevant business includes estate agency within s.1 Estate Agents Act 1979
4 By reg. 2(2)(a) relevant business includes the regulated activities of managing, dealing in, and advising on, investments