Explainer - Why must I prove my identity when obtaining a financial services product?

Proof of identityWhen you apply for certain financial services products (e.g. opening a bank account), you will be asked to verify your identity.

For example, to prove your name you will be asked to show a valid passport or driving licence.

You will also be asked to prove that you live at the address you provide.

So you may have to show a recent utility bill or another official document with your name and address on it.

Money laundering and terrorist financing

The reason your bank or financial institution requires proof of your identity and address to help prevent what’s called “money laundering” and “terrorist financing”.

  • Money laundering is something criminals do to hide the money they make from crime. This money could come from drug trafficking, organised crime, fraud or some other illegal activity. It’s called money laundering because it’s about washing away the traces of crime. Criminals want to get “dirty money” into the financial system and then move it around – or “launder” it – so it becomes hard to tell where the money actually came from.
  • Terrorist financing involves giving money to people for terrorist activities. This money can come from either genuine or illegal sources.

Anti-money laundering and countering the financing of terrorism

By asking you for proof of your identity and address, your bank or financial institution is following rules designed to prevent money laundering and terrorist financing.

These are generally referred to as “anti-money laundering laws and the countering of financing of terrorism”.

These laws are designed to make it harder for criminals to use the financial system to hide the money they make from crime and for individuals or organisations to fund terrorism.

Role of the Central Bank

It’s our job to make sure that banks and other financial institutions are following the rules designed to stop money laundering and terrorist financing.

We do this by supervising financial institutions, for example by carrying out inspections to ensure that the rules are being applied in practice.

We can, and do, impose fines on a bank or financial institution if we discover that it has not been following anti-money laundering laws.

The Central Bank does not prescribe which exact documents financial services providers should accept as valid as proof of your identity or address.

This is up to the provider to decide.

Financial Action Task Force

The Financial Action Task Force (FATF) sets international standards for institutions combatting money laundering and terrorist financing.

On 7 September 2017 FATF published a report giving an assessment of Ireland’s anti-money laundering and counter-terrorist financing system.

The report found that Ireland had a "sound and substantially effective regime" to tackle money laundering and terrorist financing.

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