ECSH33311 - When customer due diligence is required: business relationships
Source: gov.uk (2025-10-02)


A business relationship is defined in regulation 4 (https://www.legislation.gov.uk/uksi/2017/692/regulation/4) of The Money Laundering, Terrorist Financing and Transfer of Funds (Information on the Payer) Regulations 2017 (MLR 2017) as a business, professional or commercial relationship between a relevant person and a customer which is expected, at the time when contact is established, to have an element of duration.

It is important to discuss with the business if it considers it has ongoing business relationships with customers, whether it carries out occasional transactions (https://www.gov.uk/hmrc-internal-manuals/economic-crime-supervision-handbook/ecsh33312), or a mixture of both. This will determine the kind of tests you carry out when ensuring that its customer due diligence (CDD) measures are appropriate in light of the risk of money laundering and terrorist financing. You need to gather evidence of this from the business’s policies, controls and procedure documents (https://www.gov.uk/hmrc-internal-manuals/economic-crime-supervision-handbook/ecsh33210), as well as obtaining copies of any documents shown or explained by the business during your walkthrough - see ECSH33700 Records testing (https://www.gov.uk/hmrc-internal-manuals/economic-crime-supervision-handbook/ecsh33700), for example contracts, invoices, terms and conditions, letters of engagement, to confirm this. Sector specific examples are given below, however, if you need more help, please contact the Sector Specialist Team (https://www.gov.uk/hmrc-internal-manuals/economic-crime-supervision-handbook/ecsh32555).

You must ensure you understand each relationship before you can begin to test the business’s CDD procedures and review documents. You may consider asking:
- Is a customer account or profile set up, which allows the customer to carry out further transactions, without providing its details information again. If so, how is this done and by whom?
- What information is needed to set up a customer account or profile?
- Where is the customer/transactional information stored and how is it retrieved?
- When would a customer account be set up? For example, is it set up during the first transaction, after multiple transactions have occurred, when a financial threshold is reached, or when a particular service is requested?
- Does the business have a contract to provide regular services?
- Are preferential rates given to customers? When and why would this happen?
Sector specific examples

Art market participants (AMP)

AMPs (https://www.gov.uk/hmrc-internal-manuals/economic-crime-supervision-handbook/ecsh54500) may establish a business relationship where it provides regular services, for example with another AMP or artist, or where there is an element of duration with a customer, such as setting up a payment plan to pay in instalments. Remember, the business relationship must involve works of art (https://www.gov.uk/hmrc-internal-manuals/economic-crime-supervision-handbook/ecsh54575) totalling 10,000 euros or more (https://www.gov.uk/hmrc-internal-manuals/economic-crime-supervision-handbook/ecsh33314).

Accountancy service providers (ASP)

ASPs (https://www.gov.uk/hmrc-internal-manuals/economic-crime-supervision-handbook/ecsh52500) will usually establish a business relationship with all its customers as it provides regular services. For example, an accountant may be contracted to prepare a customer’s quarterly VAT returns, or a bookkeeper to record a customer’s paper receipts monthly.

Estate agency businesses (EAB)

EABs (https://www.gov.uk/hmrc-internal-manuals/economic-crime-supervision-handbook/ecsh53000) enter into a business relationship with the person selling land or property, normally no later than the date it is marketed; and on the purchaser usually when a seller accepts an offer, and no later than the point of exchange.

High value dealer (HVD)

A HVD (https://www.gov.uk/hmrc-internal-manuals/economic-crime-supervision-handbook/ecsh51500) will usually only enter into a business relationship when it allows a customer to make cash payments on account. This is where a customer is allowed to accrue credit on its account and make regular payments in instalments, rather than pay off each invoice in full. This is usually confirmed by looking at the customer’s account on the business’s computerised accounts or invoicing system (such as Sage, QuickBooks, Xero). You must ask the business to explain the codes shown within the account, for example SI (sales invoice) and SR (sales receipt). Sales invoices will show you the value of the goods sold to the customer; sales receipts show the payments the customer has made against the account. If records are kept manually or on a spreadsheet, the business will still be able to provide you with a list of sales invoices and a cash book showing payments received.

Payments on account are easily identified as they are usually in rounded amounts (£10,000, £12,500, £20,000) rather than the exact amount (pounds/pence) shown on the invoice. The same goes for cash payments made by a business, although you will need to ask for a list of purchases and payments made to suppliers.

Remember, it is the total value of cash received from a customer (or paid to a supplier) which brings an HVD into scope for supervision, not the value of the invoice.

A letting agency business (LAB)

LABs (https://www.gov.uk/hmrc-internal-manuals/economic-crime-supervision-handbook/ecsh55000) will enter into a business relationship with a tenant or trustees of a letting arrangement at the point at which the tenant’s offer is accepted, where the tenancy is for at least a month, and for rent of (for at least part of the term) equivalent to 10,000 euros or more (https://www.gov.uk/hmrc-internal-manuals/economic-crime-supervision-handbook/ecsh33314) a month, before the tenancy agreement is confirmed. Due diligence upon the landlord/tenant/trustee must be completed before the agreement is made.

Money service businesses (MSB)

Cheque cashers enter a business relationship with customers as they set up an account and will carry out extensive CDD to confirm identity before cashing any cheques. This is for commercial reasons, to ensure that if a cheque is not honoured by the bank (it bounces), that the business is able to recoup its losses. Often a centralised computer system is used to record customer/ID details, which allows a customer to transact across different branches.

Currency exchange offices often set up an account for corporate customers who regularly exchange money, for example, for business trips; however, the majority of transactions will be occasional transactions.

Money transmitters usually establish a business relationship with all customers, as they set up an account reference number which the individual can use to make further payments. They also have a business relationship with other businesses, for example a payout partner in another country, or an intermediary payment service provider (who carries out the international transfer).

MSB (https://www.gov.uk/hmrc-internal-manuals/economic-crime-supervision-handbook/ecsh51000)s carrying out Foreign Exchange (Forex) services usually establish a business relationship with customers, as they receive payment from the customer electronically, before converting the funds into the desired currency(ies), and either returning the funds to the customer, or remitting the funds to a third party, as requested by the customer. An account is set up with a unique reference number which the individual can use to convert further funds.

A Bill Payment Service Provider (BPSP), similar to MSB money transmitters, are likely to establish a business relationship with their customers (the payer or sender of the funds), as they may set up an account which the individual can use to make further payments to their utility or other household bill providers in the future.

A Telecommunication, Digital and IT payment service provider (TDITPSP) may establish a business relationship with customers depending on how the customer pays for the Telecommunication, Digital and IT (TDIT) services which they receive. For example:
- A customer establishes a contract with a TDIT network/service operator, where customers make payment for services after they have been received. This is referred to as post-pay and usually involves a contract and credit agreement. The TDIT network operator, acting as the intermediary between a customer sending a payment via a device on its network, and a provider of goods or services receiving the payment, will establish a business relationship with its customer (the payer making the payment). The TDIT network operator, acting as a payment service provider, sends a payment for the goods or services being purchased by its customer to the merchant, after receiving authority to do so from the TDIT device. It will then invoice its customer for the payment as part of their next bill.
- However, if a customer uses the services of the TDIT network/service operator by “topping up” or making a payment ahead of using the service (referred to as pre-paid), it is unlikely a business relationship is established. This is because the TDIT network operator has no control over nor information on the payer, other than an account number and a credit associated to the TDIT device.
Trust or company service providers (TCSP)

TCSPs (https://www.gov.uk/hmrc-internal-manuals/economic-crime-supervision-handbook/ecsh52000) usually enter a business relationship with all customers as there is an element of duration, for example providing a registered office address. It also applies to one-off company formations - see regulation 4(2) (https://www.legislation.gov.uk/uksi/2017/692/regulation/4) MLR 2017for full details.

Remember, a business must follow the anti-money laundering (AML) guidance for the sector/s it operates in, published on GOV.UK (https://www.gov.uk/government/collections/anti-money-laundering-supervision-detailed-information#guidance-for-specific-business-types). You must therefore only refer to the requirements as set out in the guidance for the specific sector the customer falls into.

Once you have confirmed and evidenced that a business relationship is established with a customer, you can then move on to test whether the CDD measures applied are appropriate (https://www.gov.uk/hmrc-internal-manuals/economic-crime-supervision-handbook/ecsh33325).