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For a brief moment, I wondered if someone had spiked my drink. The more I read the document, the more it became apparent that the regulator is advocating an approach that has the potential to make it significantly easier for advisers and product providers to do business and to take a costly process out of the chain. The document which cau-sed this epiphany is entitled ID – Diffusing The Issue, A Progress Report and can be found at http://www.fsa.gov. UK/pubs/other/id_report.pdf. It may not sound like a riveting read but for anyone involved in setting up new designated investment business, it must be essential reading. One of the first things this document recognises is that what the industry tends to refer to as money-laundering checks are really only one part of the anti-money-laundering process. More accurately, the pro-cess is one of identifying a customer and verifying that the ID is accurate. It is currently a cumbersome process and a significant constriction on the ability to innovate new business processes. At the heart of the new app-roach is a recognition that the current method of obtaining evidence of a client’s identity, primarily based around seeing paper documents, is both costly and seriously flawed. Such is the sophistication of the forgery market that perfect facsimiles of every conceivable document can be bought over the internet for just a few hundred pounds. At the same time, significant advances have been made in addressing these obligations electronically. There has been provision for the industry to use electronic identity and verification for some time but there has always been a perception that these were in some way not as secure as physical checks. It is now recognised that the reverse is true and that electronic checks can be far more reliable and significantly mitigate risk in the money-laundering process. In the case of financial pro-ducts sold via the internet, if it is not possible to move away from physical ID checks, the reality is that you can never fully achieve the benefits of electronic submission. Imagine setting up an investment online and having to hold on to everything while physical ID checks are carried out. The FSA has also recognised that the current process is frequently duplicated in the course of setting up a transaction, with both the adviser and provider carrying out checks. In its document, the FSA rec-ognises the scope for wider use by firms of ID&V checks that have been carried out by another firm. I understand that in the past this and the need for providers to be able to carry out subsequent audits of e-ID&V carried out by other firms, has been one of the major stumbling blocks to wider adoption of this process. At least one solution demonstrated to me recently appears to cater fully for these needs. >From conversations rec-ently, there is a very strong demand from the major adv-ice firms to adopt e-ID&V but on the provider side, there is rather more reticence. As far as I can tell, this is driven more by concern that there are significant areas of their business, such as legal and compliance, which have eff-ectively ringfenced anything to do with changing the money-laundering process as unacceptable. Where this is the case,I would urge the widest poss-ible dissemination of the FSA study. It is clear from its publication that the FSA is adopting a practical and pragmatic approach to this issue while at the same time seeing new processes as an opportunity to make the process more robust. I would suggest that it is in the interests of everyone who wants to see cost taken out of businesses to ensure that the naturally cautious nature of those responsible for assessing business risk does not result in them missing a major opportunity. These changes represent a major opportunity for advisers and providers not only to reduce cost but also to reduce the level of risk in their businesses. Clearly, there are several potential providers of e-ID&V services in the mar-ket and the opportunity exists for healthy competition bet-ween them. To gain maximum benefit, however, it will be important for advisers, life offices, fund managers and supermarkets to agree exactly what will be accepted as the minimum req-uirements so that everyone can be certain that e-ID&V will fully meet anti-money-laundering obligations and that paper, with all its associated costs and inefficiencies, will not be allowed to creep into the process again. The new approach from the FSA clearly presents the opportunity to change the way these checks are now carried out but there is still the need for the industry to grasp this opportunity and make the changes a reality. To assist in this process, Adviser Forum will hold a meeting to involve all the key stakeholders in January to see what tactical steps can be taken to ensure that a consistent approach, with all the associated cost savings, can be put in place at the earliest opportunity. Aifa says it will attend, as have a number of the biggest IFA firms. Interested parties from major distributors or manufacturers wanting to participate should contact their Adviser Forum representative or me direct at ian.mckenna @ftrc.co.uk. One significant view which emerged from last week’s Adviser Forum meeting was that a number of the biggest distributors stated that use of electronic ID and verification was likely to be a major criteria in the selection of providers for multi-tie panels. The FSA deserves considerable credit for having the courage to recognise where old paper-based processes are obsolete and inefficient and for endorsing a more practical approach which is suitable for transacting business in the 21st Century. At the risk of appearing ungrateful, could I suggest that the regulator repeats the process with the rest of its documents, starting with the conduct of business sourcebook, please.