Money laundering and two businesses

Client has two businesses - is CDD need on all clients or just regulated ones?

Didn't find your answer?

A limited company client is registered under the money laundering regulations with hmrc as a trust and company service provider (TCSP). The income will be about 10% of the turnover. The rest of his turnover comes from web design.

Does the client he have to undertake customer due diligence his web business customers that is carried on within the same limited company. If yes it will mean he will be checking passports where as other web designers do not have to do this?

I looked at the 2017 version of the money laundering regulations and the position is to my mind unclear. The CDD is required to be carried out on a client by a relevant person. A relevant person is defined as someone who carries on a business as.... a TCSP. It is not clear whether this means whether a person ceases to be a relevant person when carrying on a different business. The situation is not dissimilar from a VA who does a small amount of bookkeeping who also has to register. Do they have to do CDD on their VA clients were no bookkeeping is carried out.

Any help greatly appreciated.

Replies (7)

Please login or register to join the discussion.

Stepurhan
By stepurhan
12th Apr 2024 12:42

Given the associated risks that come with such a business, is it actually sensible to run the trust business through the same company as the web design business. The risk of a problem business bringing down a business that is otherwise sound should always be considered when setting up a structure.

I assume VA is Virtual Assistant in this context. I would have thought it would be sensible for a Virtual Assistant to perform CDD on customers, given they are likely to directly involved in the business for the other work they do as well.

Thanks (0)
Stepurhan
By stepurhan
12th Apr 2024 12:42

Given the associated risks that come with such a business, is it actually sensible to run the trust business through the same company as the web design business. The risk of a problem business bringing down a business that is otherwise sound should always be considered when setting up a structure.

I assume VA is Virtual Assistant in this context. I would have thought it would be sensible for a Virtual Assistant to perform CDD on customers, given they are likely to directly involved in the business for the other work they do as well.

Thanks (1)
Replying to stepurhan:
avatar
By AlanKennedy
12th Apr 2024 14:41

Yes it would be best to do this - but the client who are in the web design business are also going to be the registered office clients so director is reluctant to separate the two for commercial reasons.

Thanks (0)
David Winch
By David Winch
12th Apr 2024 12:47

Reg 12(2) "In these Regulations, “trust or company service provider” means a firm or sole practitioner who by way of business provides any of the following services to other persons, when that firm or practitioner is providing such services".

Thanks (4)
Replying to davidwinch:
Stepurhan
By stepurhan
12th Apr 2024 13:19

davidwinch wrote:

Reg 12(2) "In these Regulations, “trust or company service provider” means a firm or sole practitioner who by way of business provides any of the following services to other persons, when that firm or practitioner is providing such services".

The common sense answer is also actually the legal answer. Good to know.
Thanks (1)
Replying to stepurhan:
avatar
By Paul Crowley
12th Apr 2024 13:20

Agree. Most unusual.

Thanks (1)
Replying to davidwinch:
avatar
By AlanKennedy
12th Apr 2024 14:40

Brilliant answer David - how did I miss that!

Thanks (0)