Several people have recently asked what procedures financial organisations must follow when identifying their customers and what documents may be used as proof of personal identity. They have objected to the practices of some financial institutions that, with reference to their internal regulations refuse to accept any authority-issued valid certificates from their customers as proof of personal identity, other than personal identification certificates.

We hereby briefly inform customers of the rules for customer identification performed pursuant to the rules for the prevention and deterrence of money laundering and also pursuant to the rules to be applied independently of those.

1. Identification pursuant to the rules for the prevention and deterrence of money laundering

Pursuant to the provisions of Act XV of 2003 on the prevention and deterrence of money laundering, when establishing a relationship with a customer (and in certain other cases as specified) financial organisations are obliged to identify the customer, its proxy, the person with disposal powers or the representative.

Identification shall mean the confirmation of the personal identity of the mentioned persons using the official documents specified in the law, and recording certain itemised details in writing as specified.

The following official documents shall be required for the identification of natural persons:

• For a natural person who is a domestic resident, his/her personal identification certificate (personal certificate) and his/her authority-issued address certificate, or passport and authority-issued address certificate;
• For a natural person who is the resident of a foreign country, his/her passport, his/her personal identification certificate (provided that it entitles to holder to reside in Hungary) or his/her valid residence permit;
• For a natural person under 14 years of age, his/her authority-issued certificate of the personal identifier or his/her passport, or his/her student certificate.

 For a legal entity  or some other legal arrangement the person entitled to act in the name or on behalf of the organisation must produce, in addition to the official documents indicated above, an official document that provides proof of the following:

• For a domestic economic organisation, that it has been duly registered with the court of registration or that it has submitted an application for registration;
• For a sole entrepreneur, that he/she has a tax identification number or that he/she has submitted an application to register with the tax authority;
• For some other domestic legal entity, that it has been registered, if its creation requires it to be registered  by some authority or court, or that it has submitted an application for registration;
• For a foreign legal entity or other foreign legal arrangement, that it has been registered or was entered into the records pursuant to the laws of its country of domiciliation.

Prior to submitting an application to an authority or to the court of registration for the registration of the firm by the authority or by the court of registration, a legal entity or other legal arrangement shall submit its articles of association (deed of foundation or statutes) for the purpose of identification.

2. What official personal documents may be requested in other cases?

a. As proof of personal identity

Paragraph (4) of Article 29 of Act LXVI of 1992 on the registration of the personal details and addresses of citizens sets forth a general rule, based on which, in addition to the personal identification certificate, proof of personal identity for a citizen may be provided by any authority-issued certificate that contains the citizen’s name, place and date of birth, citizenship, facial image and autograph signature. These conditions are currently met by the personal identification certificate, by the passport and by the new type of driving license in card format (if issued following 1 January 2001).

If, for the purpose of personal identification, a citizen produces a valid authority-issued certificate that contains the data as above, then unless otherwise provided for in legal statutes, he/she may not be obligated to produce another official document.

In order to harmonise the legal statutes governing the range of official documents suitable for personal identification, the amendment of Act XV of 2003 on the prevention and deterrence of money laundering is currently under way. Following the enactment of the amendment the new type of driving license in card format shall also be acceptable as proof of personal data.

Pursuant to the above, financial organisations proceed correctly if they allow natural persons to also provide proof of their personal identity by producing a passport together with an authority-issued address certificate in the course of identification.

b. Providing proof of some other data, fact or circumstance

One should not mistake customer identification with cases where financial organisations require customers to produce some official document or other paper in order to provide proof of some data, fact or circumstance that may be necessary for signing a financial contract and not for the purpose of personal identification.

An example for this could be the requirement to provide proof of age to the disbursing credit institution using a personal certificate or a birth certificate when confirming that the person meets the conditions for a home-related state subsidy. Another identical example could be for a financial organisation to stipulate in its business regulations certain contractual conditions for customers to produce other documents, such as to attach utility bills when submitting an application for a consumer loan. The above rules for customer identification shall not influence the process used by the service provider to obtain proof that a representative is duly authorised as such, if the service provider may stipulate that a representative must produce further documents in order to confirm his/her entitlement.

We finally draw your attention to the fact that the strict identification rules for the financial market are primarily explained by the higher risks of financial contracts. Since the ultimate aim of these provisions is to reduce the risks of the entire financial system, they indirectly serve the interest of all customers, i.e., the interests of us all.