New rules fight money laundering

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The Independent Online
ANYONE with more than pounds 10,000 to invest should be aware of new European rules that came into force on 1 April.

These make it illegal for fund managers, stockbrokers, insurance companies and financial advisers to accept investments of more than that unless the identity of the investor is clearly established.

The aim of the rules is to stop the 'laundering' of money gained through activities such as drugs, theft, terrorism and extortion. However, many people who are trying to make perfectly legitimate investments will have to make new provisions.

Typically, cheques from banks and building societies are paid out to the investment company without the name of the investor printed on them.

These are now not acceptable for investments over pounds 10,000. Investors must either ask the bank or building society to print the name on the cheque, or provide some additional form of identification.

Investment companies and financial advisers are pressing the banks and building societies to change their systems so that the names would automatically be printed on the cheques.

Peter Edwards, partner with Premier Unit Trust brokers, said that the vast majority of transactions involved cheques with no identification on them. He said: 'It would be easier if the banks and building societies changed their systems. I recently had a client who wanted to invest pounds 10,000, just before going on holiday. He had a nude cheque from the Halifax. He ended up having to cancel the investment.'

Mr Edwards also thinks that such a move by the building societies would also stop investors having to send off important documentation, such as passports or driving licences, through the post.