Before the agreement is signed and a finance deal concluded it is important that checks are made to confirm the identity of a customer and that the driving licence is valid and confirms the customer's details.
Formally identifying the customer is an important Anti-Money Laundering (AML) requirement (see section 14 for more detail). This process – known as Know Your Customer or KYC – is important in preventing fraud and money laundering and therefore ensuring the likelihood that the customer will make the monthly payments for the vehicle they obtain possession of.
Finance & Leasing Association (FLA) members have agreed the following process as KYC best practice:
- The customer should be asked for their photocard driving licence.
- The dealer or broker should photocopy the photocard, stamp and sign to confirm that the picture on it is a true likeness of the customer and (if the agreement is approved by the customer in paper format) that the signature matches that provided on the agreement.
- If the validity of the driving licence is in doubt then the customer should be asked to provide another form of photo ID such as a passport. This ensures the customer can be identified in line with AML requirements.
- The finance company will carry out further checks and confirm with the dealer or broker that the customer has been fully ‘onboarded' (accepted to receive finance).
- Only once confirmation is received should the dealer release the vehicle to the customer.