By Corrinne Louw

28 July 2009

The Ombudsman for Banking Services, Clive Pillay, this week stressed that his statement, in which he said there was no obligation for banks to copy IDs, was made against the backdrop of concern for the rising incidence of identity theft.

He said his comment to a national newspaper was taken "slightly out of context" and all he was saying was that while a person could refuse to have a bank copy their ID, they would also have to deal with the bank's refusal to process their transaction.

His initial statement said in part: "The Financial Intelligence Centre (FIC) Act obliges banks to establish and verify the identity of every client before they can enter into a business relationship. But there is no obligation in the Act to actually copy ID books. The bank can verify your identity by simply looking at you and at your photo and record on the file that it is satisfied that you are the person that appears in the ID book."

Pillay said he believed that the copying of an ID was the more prudent and practical way for banks to verify identity but if a person felt their identity was at risk, they could simply refuse to let the institution make a copy.

He said that the same applied to financial and non-financial institutions, including banks, life insurers, investment managers, attorneys, estate agents and licensed gambling institutions.

"Section 22 of the FIC Act refers to the duty of accountable institutions to keep records of the identity of the customer; this includes a record or copy of the documents which the institution had used to verify a person's identity. When the record-keeping requirement is read in conjunction with the requirement to establish and verify the identity of a customer, it is clear that the use of an Identity Document forms part of the procedure of identifying a customer and therefore forms part of the record of the customer's identity which must be kept by the institution. "

Earlier this year, Pat Cunningham, executive director of the SA Fraud Prevention Services, said identity theft cost the country well over R1-million last year.