ECSH52100 - What is unique about visits to Trust or Company Service Providers

What's unique about visits to Trust or Company Service Providers (TCSP)?

The payment of fees between a TCSP and its customer would not normally be the way in which money is laundered. The money laundering (ML) risks are mainly surrounding the anonymity which the services provided by the TCSP can, at a later date, be exploited by customers as part of an operation to launder money (or carry out other criminality). 

For example, consider a TCSP providing a nominee director service for a customer and charging a fee for this service. The ML risks are not primarily in the payment of the fee for the nominee service, rather they relate to how the customer could use that nominee service as part of a money laundering or other criminal scheme.

TCSP services by their nature are corporate solutions that perfectly legitimate businesses can benefit from, but equally could be exploited by any business to facilitate money laundering, terrorist financing and proliferation financing (ML/TF/PF). A TCSP needs to understand and assess the risk that the services they provide to their customer could be used for ML/TF/PF, and by providing the service the TCSP could themselves be facilitating ML/TF/PF.

Whilst all sectors subject to the MLR 2017 need to risk assess business relationships with their customers, to do so a TCSP will typically need to have a greater understanding of their customers business affairs to appropriately assess these risks.

The level of access a TCSP has to their customer’s business records and transactions, and as such into their financial and business affairs, depends on the services they are providing. Some TCSP services will attract sight of a customer’s bank accounts, and/or primary records, contributing to a ‘fuller picture’ of a customer’s affairs.

Provision of other TCSP services may only require access to a limited amount and, as such, the TCSP may be privy to a ‘fragmented’ or partial view of the customer’s affairs. In the case above example, a TCSP offering nominee directorship services would expect to have day-to-day management responsibilities for their customer’s business and therefore have sight of transactions and accounts, whereas standalone formation services would not have such visibility. For an overview of what to expect at a visit to a TCSP, see ECSH52150 Trust or Company Service Providers(General) – What would you expect to see on a visit

For a TCSP, the provision of any TCSP service constitutes a business relationship, regardless of whether or not the relationship with the customer is expected to have an element of duration. This includes where a TCSP forms a firm for a customer and does not provide any other product or service that is in scope of the Money Laundering Regulations 2017 (MLR 2017). This is relevant to consider when determining if a TCSP has taken appropriate steps to carry out ongoing monitoring of a business relationship under Regulation 28. For further information on Customer Due Diligence measures see ECSH52150 Trust or Company Service Providers(General) – What would you expect to see on a visit  and ECSH33300 Checking customer due diligence