TRSM24030 - Types of trust that need to be registered: non-UK trusts entering a business relationship: contents: element of duration
The Business Relationship definition requires that the relationship between a UK Relevant Person and a customer has an element of duration, which was expected by the Relevant Person at the time the relationship commences.
The Regulations do not define what ‘element of duration’ means. As a general rule, a Business Relationship that goes beyond a one-off, short-lived transaction is likely to have the requisite ‘element of duration’.
Other indicators that a new Business Relationship has an expected ‘element of duration’ could include:
- where the nature of the relationship is such that an ongoing relationship would be assumed in the circumstances (for example an accountant preparing regular accounts on behalf of the trustees)
- where the trustees or the Relevant Person explicitly or implicitly state an intention to establish an ongoing Business Relationship
- where the time reasonably required to complete the business activity necessitates the formation of an ongoing relationship, for example, the purchase of land, which may be expected to take many months to complete.
In practice, most professional relationships between a Relevant Person and trustees are likely to have the requisite element of duration, unless there are specific reasons to believe that the relationship will be limited to a single, short-lived transaction. Trustees should consult with the Relevant Person if they are unsure whether the Relevant Person would consider the relationship to have the requisite element of duration.
If Relevant Persons provide the following services to a trust, this will constitute a Business Relationship regardless of actual duration or whether any of the transactions could be regarded as a ‘one off’:
- forming a firm
- acting, or arranging for another person to act, as a director or secretary of a company; a partner of a partnership; or in a similar capacity in relation to other legal persons
- acting, or arranging for another person to act, as a trustee of an express trust or similar legal arrangement; or a nominee shareholder for a person other than a company whose securities are listed on a regulated market
- an estate agent entering into a Business Relationship with a purchaser (as well as with a seller), at the point when the purchaser’s offer is accepted by the seller