Legitimation check: Everything you need to know!

One Legitimation check is a procedure in which the identity of a person is verified. This is often used in the Opening of a Bank account, in the Request for a Credits or when issuing a ID card such as an ID card or passport. In order to perform the legitimation check, certain documents are required, which die confirm the identity of the applicant. These documents are verified by the bank directly, but mostly by a service provider such as WebID. Legitimation verification is required by law when opening an account and granting credit, and is intended to prevent fraud and money laundering.

What is a legitimacy check?

A legitimation check is a procedure in which the identity of a person is verified. This can be done either by presenting a valid Identification document or by entering personal data. In some cases, a biometric legitimation check may also be required. While this check is not required when opening a bank account or applying for a loan, it is required when issuing a Residence permit (eAT) accomplished.

When is a legitimation check performed?

A legitimation check is performed when a person wishes to purchase a service or product for which there is an age restriction. This may be the case, for example, when purchasing alcohol, tobacco or medication. Also when opening a bank account or entering into a credit agreement, or Installment purchase contract a legitimation check is carried out. In some cases, it is also necessary for a person to identify himself or herself to an authority or company before he or she can use a service. The legitimation check is required by law when opening an account and granting credit, and is intended to prevent fraud and money laundering.

What documents are needed to establish identity?

A valid ID card or passport is usually required for the legitimation check. In some cases, a driver's license can also serve as proof of identity. The ID must still be valid and you must be able to identify yourself on the basis of the ID. For this you have to pass several tests. For example, you have to turn the ID around both axes so that the holgrams reflect in the light and the employee can check them. Often, you are also required to move 3 splayed fingers across the ID to demonstrate the authenticity of the ID and the phone call.

Who performs the legitimacy check?

The legitimation check is performed either by the bank directly or by a service provider for legitimation checks such as WebID carried out. If it is a Post Ident procedure, a Post employee will check your ID.

Below are a few screenshots from WebID's legitimacy check for my credit card of the Norwegian Bank*. This free credit card offers a payment term of up to 45 days and even €30 bonus for opening. More free credit cards can be found in the linked article.

Why is the legitimation check required by law?

The purpose of the legitimation check is to Illegal use of bank accounts and credits avoided become. Therefore, banks are legally obliged by the Money Laundering Act (GwG) to carry out a customer legitimation check. In doing so, they must verify the first name and surname, place of birth, date of birth, nationality and residential address. This obligation is laid down in Section 11 of the Money Laundering Act.

However, a legitimation check also serves the Bank security. Especially when it comes to allocating credit, banks have a strong vested interest in knowing the borrower.

Money Laundering Act (GwG) Section 11: Identification; collection of information for the purpose of identification

(1) 1Obligated parties shall identify contracting parties, any persons acting on their behalf and beneficial owners prior to the establishment of the business relationship or prior to the execution of the transaction by collecting the information pursuant to paras. 4 and 5 and by storing such information in accordance with § 12 check 2Identification may also be completed immediately during the establishment of the business relationship if this is necessary in order not to interrupt the normal course of business and if there is a low risk of money laundering and terrorist financing.

AMLA §11

How long does it take to establish identity?

Depending on the provider, establishing identity via video is often possible daily from 8 a.m. to 10 p.m. and usually only takes about 5 - 6 minutes. The prerequisite for use is either an app (e.g., from POSTIDENT or WebID) or calling up a website. In addition, you must have an ID card (passport or ID card) with holographic features handy for the legitimation check.

Alternative: Opening an account abroad without verification of identity

Opening an account abroad is an alternative way to get a Account without legitimacy check to open. However, opening an account abroad offers other advantages besides their anonymity. Because a foreign account often has higher interest on deposits and contributes through the other currency to the Risk diversification of your assets.

Unfortunately, foreign accounts are not seizure-proof either. Especially within the EU, they can be viewed by German authorities in a similar way as normal domestic accounts due to corresponding agreements. Therefore, opening an account abroad without a legitimation check does not release you from tax and legal obligations in Germany.

Nevertheless, a foreign account offers increased anonymity. This applies primarily to Accounts in other EU countries. In addition, a foreign account is a way to leverage currency risk and even benefit from higher interest rates on top of that. If you've ever thought about opening a foreign account, I would definitely advise you to give it a try!

Opening a foreign account in Switzerland:

• Yuh offers a free account for residents of Germany or a neighboring country of Switzerland.
• wise offers a multi-currency account, but no Swiss bank account.

Important facts about foreign accounts without legitimacy check summarized:

• Foreign accounts are ideal for Risk diversificationas you can maintain your assets even if the euro weakens.
• Foreign accounts often offer higher interest on deposits compared to Germany. You can find current conditions in the Daily allowance comparison
• In addition, opening an account is straightforward in most countries, provided that assets are available.
• However, a Foreign account not garnishment proof. Even without establishing your identity does not release a foreign account from tax and legal obligations in Germany!
• Last but not least, in many countries you have to deal with Higher account management and transaction fees calculate.

Continue reading:

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