Section 37(3)

When assessing whether there is a low degree of risk of money laundering and terrorist financing in a particular situation, and the extent to which it is appropriate to apply simplified customer due diligence measures in that situation, the relevant person must take account of risk factors including, among other things— customer risk factors, including whether the customer— is a public administration, or a publicly owned enterprise; is an individual resident in a geographical area of lower risk (see sub-paragraph (c)); is a credit institution or a financial institution which is— subject to requirements in national legislation having an equivalent effect to those laid down in the fourth money laundering directive on an obliged entity (within the meaning of that directive); and supervised for compliance with those requirements in a manner equivalent to section 2 of Chapter VI of the fourth money laundering directive; is a company whose securities are listed on a regulated market, and the location of the regulated market; product, service, transaction or delivery channel risk factors, including whether the product or service is— a life insurance policy for which the premium is low; an insurance policy for a pension scheme which does not provide for an early surrender option, and cannot be used as collateral; a pension, superannuation or similar scheme which satisfies the following conditions— the scheme provides retirement benefits to employees; contributions to the scheme are made by way of deductions from wages; and the scheme rules do not permit the assignment of a member's interest under the scheme; a financial product or service that provides appropriately defined and limited services to certain types of customers to increase access for financial inclusion purposes in the United Kingdom; a product where the risks of money laundering and terrorist financing are managed by other factors such as purse limits or transparency of ownership; a child trust fund within the meaning given by section 1(2) of the Child Trust Funds Act 2004 ; a junior ISA within the meaning given by regulation 2B of the Individual Savings Account Regulations 1998 ; geographical risk factors, including whether the country where the customer is resident, established or registered or in which it operates is— the United Kingdom; a third country which has effective systems to counter money laundering and terrorist financing; a third country identified by credible sources as having a low level of corruption or other criminal activity, such as terrorism (within the meaning of section 1 of the Terrorism Act 2000 ), money laundering, and the production and supply of illicit drugs; a third country which, on the basis of credible sources, such as evaluations, detailed assessment reports or published follow-up reports published by the Financial Action Task Force, the International Monetary Fund, the World Bank, the Organisation for Economic Co-operation and Development or other international bodies or non-governmental organisations— has requirements to counter money laundering and terrorist financing that are consistent with the revised Recommendations published by the Financial Action Task Force in February 2012 and updated in October 2016; and effectively implements those Recommendations.

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Source: legislation.gov.uk · retrieved 2026-09-04