ECSH63490 - Regulation 31 – Requirement to cease transactions etc

Category Heading	Description
The Law	https://www.legislation.gov.uk/uksi/2017/692/regulation/31
What it means	When a relevant person has been/is unable to apply customer due diligence [CDD] (as required under MLR 2017 Regulation 28); the relevant person must: Not carry out an occasional transaction with a customer Not establish a business relationship with a customer Terminate any existing business relationship with the customer Consider whether a disclosure should be made (i.e. consider whether a Suspicious Activity Report should be made)
Purpose	This Regulation explains and sets out what a relevant person/business should do in the event that it has not been able to undertake/complete CDD measures. This Regulation only applies where the relevant person has made all reasonable attempts to complete CDD. It does not apply in situations whereby the undertaking of CDD was not attempted or whereby CDD measures were completed; but the records/evidence of this cannot be located.
Time Line	MLR 2003 – Regulation 4
What to establish	Has the relevant person/business conducted a relevant transaction/onboarded a customer to provide a relevant service?  Has the relevant person/business attempted to undertake CDD and been unable to do so?  If the relevant person/business has been unable to apply CDD, have they terminated a business relationship or transaction?  Did the one-off transaction/business relationship termination result in the relevant person/business consider an internal report?   If yes; did the one-off transaction/business relationship termination result in a Suspicious Activity Report being made? Was this considered? Did the business receive “consent” from the NCA to continue with the business relationship/ transaction?  NB: The requirements within this Regulation mean that a business/relevant person “must” terminate the business relationship or not undertake a one-off transaction when it has been unable to complete CDD. Additionally; the business/relevant person “must” consider whether a Suspicious Activity Report should be submitted.
How to test compliance and evidence to obtain	Ask if there have been any relevant transactions or customers onboarded to undertake a relevant service? Ask if there have been any instances where the business/relevant person has tried to undertake CDD and been unable to do so? Ask if there have been any circumstances where the business/relevant person has terminated a business relationship/relevant transaction where it was unable to carry out appropriate CDD/EDD. Ask for information as to why CDD information couldn’t be gathered. What efforts/steps the business/relevant person had undertaken to complete a satisfactory level of CDD (as per its RA/PCPs). Ask to see a copy of any SAR related to the transaction, and consent received to continue (where appropriate). Check business records to confirm that the business did cease to carry out further transactions (unless appropriate CDD/EDD was subsequently carried out).
Best Practice	Case study: During a visit to a car dealer registered as an HVD, the HVD has been able to gather the name of a customer conducting a relevant transaction in cash, however has been unable to verify their name in the form of information or documentation. The HVD was asked whether they carried out the transaction without being able to verify the customers ID. The HVD explained that.  The transaction was declined. The customer later paid for the car by bank transfer.
AMP	No additional Best Practice
ASP	No additional Best Practice
EAB	No additional Best Practice
LAB	No additional Best Practice
HVD	No additional Best Practice
MSB	No additional Best Practice
TCSP	No additional Best Practice
Further Reading	Regulation 28
	21ZA of Terrorism Act 2000
	JMLSG guidance
	Section 330 POCA
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