ECSH33312 - When customer due diligence is required: occasional transactions

An occasional transaction is defined within regulation 3 of The Money Laundering, Terrorist Financing and Transfer of Funds (Information on the Payer) Regulations 2017 (MLR 2017) as any transaction which is not carried out as part of a business relationship.

There are varying thresholds for occasional transactions across the sectors, set out in regulation 27, and you must ensure that the business is aware of and is applying the thresholds appropriate to their business activities.

Money transmitters - regulation 27(1)(b) applies

If you are conducting a check to a money service business (MSB) providing money transmission you must check that customer due diligence (CDD) measures are applied to all transfer of funds exceeding 1,000 euros.

However, as shown in the MSB guidance, HMRC expects that money transmission businesses should obtain and verify the identity of customers for all transfers of funds, regardless of value. Usually, a business relationship is established with all customers, and therefore the threshold will not apply.

 

High value dealers (HVD)

HVDs must apply CDD measures for an occasional transaction in cash that amounts to 10,000 euros or more, whether the transaction is executed in a single operation or in several operations which appear to be linked.

You should ask for a list of HVD cash payments, made and received, for the relevant period you want to test. As a benchmark, we would usually select transactions above £8,500 to test, to take account of fluctuating exchange rates. If the business is unable to provide a list of “relevant” cash transactions, you will need to confirm what business records are available and extract the relevant transactions. You may need to look at a range of records, for example, invoices raised/received, computerised accounts and compare them to bank statements. You should be able to follow the audit trail for a customer transaction from order, payment, to delivery of the goods. See HVD specific guidance for more help.

 

All other sectors

All other sectors(including MSBs who do not carry out a transfer of funds (for example currency exchange offices) but excluding letting agency business and art market participants) must apply CDD measures when a customer carries out an occasional transaction that amounts to 15,000 euros or more, whether the transaction is executed in a single operation or in several operations which appear to be linked.

To check if the business is required to apply CDD measures ask for a full list of transactions for the period you want to test, you will then need to filter out those below 15,000 euros.

See further guidance regarding linked transactions and how to convert the euro thresholds into sterling.