Client with Multiple Designated Services: What Are the CDD Rules?
You helped a client with a conveyance last year. Now they're back — setting up a business venture. Do you need to redo CDD? Is this the same "business relationship"? Here's what the reformed AML/CTF Act says.
Step 1: Understand "Business Relationship"
Statutory definition
A business relationship means a relationship between a reporting entity and a customer involving the provision of a designated service or designated services that has, or could reasonably be expected to have, an element of duration.
This is the key concept. It distinguishes ongoing client relationships from purely one-off (occasional) transactions. If a client has used your services before and returns for new work, you likely have a business relationship with an element of duration.
The definition is broad. It covers the provision of "a designated service or designated services" (plural). A business relationship is not limited to one type of designated service — it can span multiple services over time.
Step 2: Initial CDD — When Is It Triggered?
Under the reformed Act, you must complete initial CDD before you start providing a customer with a designated service. The obligation is framed around each provision of a designated service, not once per customer.
However, this does not mean you need to start from scratch every time. There are two scenarios to consider:
Scenario A: New service, no material change in risk
If you already hold current, verified CDD records for the client, the new service is similar in nature and risk profile to previous work, and the client's ML/TF risk remains low, your existing CDD may be sufficient. You should still review and confirm that your records remain adequate and current (ongoing CDD), but a full fresh initial CDD process is unlikely to be required.
Scenario B: New service represents a significant change
If the new service represents a significant change in the nature and purpose of the business relationship that results in the customer's ML/TF risk being assessed as medium or high, you must complete initial CDD before providing that service. AUSTRAC's guidance is clear: "you must complete initial CDD on a pre-commencement customer if they request a new service in a way that's different from your existing business relationship, and this means the customer's ML/TF risk will be medium or high."
Step 3: Apply It to Your Example
Example: Conveyancing client now setting up a business venture
Last year: Residential conveyance
You assisted with a standard property settlement. This was a Table 6 designated service (assisting with the purchase or sale of real property). You completed initial CDD at the time.
Now: Business venture structuring
The same client returns wanting help setting up a business. Depending on the work involved, this could trigger multiple different designated services:
- Creating or managing a company (Table 6, item 5)
- Creating or managing a trust (Table 6, item 6)
- Managing client funds through your trust account (Table 6, item 3)
- Buying or selling a business as a going concern (Table 6, item 1)
Assessment
Moving from a straightforward residential conveyance to business structuring is very likely a significant change in the nature and purpose of the business relationship. Business structuring involves higher ML/TF risk factors including: complex ownership arrangements, potential for shell entities, higher-value transactions, and multiple parties. This would almost certainly push the client's ML/TF risk to at least medium, triggering the requirement to complete initial CDD before providing the new services.
What "Initial CDD" Means in This Context
Even though you previously identified this client for the conveyance, the initial CDD for the new engagement should address the new risk profile:
- Review and re-verify identity — ID documents from last year may still be current, but confirm they haven't expired and details remain accurate
- Understand the new service — what exactly is the business venture? What entities are being created? Who are the other parties?
- Identify beneficial owners — the new company or trust will have its own beneficial ownership structure to identify
- Assess source of funds/wealth — where is the capital for the venture coming from?
- Conduct a fresh risk assessment — the risk rating for business structuring will differ from a residential conveyance
- Screen for PEPs and sanctions — re-screen all relevant parties including any new beneficial owners
Pre-Commencement Customer Rules
If this client's conveyancing matter was before 1 July 2026 (making them a Pre-Commencement Customer), Section 36 provides some relief: you don't need to retrospectively complete initial CDD on pre-commencement customers unless one of the triggers is met.
But here's the key point for your scenario: the client coming back with a completely different type of work (business structuring vs. residential conveyancing) is precisely the kind of "significant change in the nature and purpose of the business relationship" that AUSTRAC identifies as a trigger. The pre-commencement relief does not exempt you from CDD when the relationship materially changes.
Ongoing CDD Still Applies
Two parallel obligations
Remember, once you have a business relationship with a client, you have two sets of CDD obligations running in parallel:
- Initial CDD: Must be completed before providing each new designated service (where triggers are met)
- Ongoing CDD: Continuous monitoring throughout the relationship — reviewing risk, updating KYC information, monitoring transactions, and re-verifying when doubts arise
Transaction monitoring applies to all customers, whether you have a business relationship or they are occasional clients. But the obligation to periodically review and update KYC and risk assessments only applies where a business relationship exists.
Practical Tips for Managing Multiple Services
1. Centralise your CDD records per client
Don't silo CDD by matter. Maintain a single client-level CDD file that is updated with each new engagement. This prevents duplication and ensures you can see the client's full history at a glance.
2. Risk-assess each new service
When a returning client requests a new type of service, conduct a fresh risk assessment for that service. The risk factors for conveyancing are different from business structuring, trust creation, or company management.
3. Document your reasoning
If you decide that a new service does not trigger fresh initial CDD (because the change is not significant or risk remains low), document that assessment. AUSTRAC expects you to be able to demonstrate your reasoning.
4. Watch for new entities
If the new service involves creating a company or trust, that entity is a new customer requiring its own CDD. The individual client may already be identified, but the new entity (and its beneficial owners) will need separate identification and verification.
Summary: Decision Framework
Is the new service a designated service? If not, AML/CTF obligations don't apply to it.
Do you already have a business relationship with this client? If yes, ongoing CDD obligations are already running.
Does the new service represent a significant change in the nature and purpose of the relationship? Consider: Is it a different type of work? Does it involve different risk factors? New parties or entities?
Does that change result in ML/TF risk being medium or high? If yes, you must complete initial CDD before providing the service.
Are new entities being created? Each new company, trust, or partnership is a new customer requiring its own CDD.
Key Takeaway
A business relationship can span multiple designated services. You do not automatically need to redo CDD from scratch for every new matter. But when a returning client requests a fundamentally different type of service that changes the risk profile — like moving from residential conveyancing to business structuring — this is a "significant change" that triggers fresh initial CDD. Document your assessment either way.
Read our complete Tranche 2 Guide
Key dates, affected sectors, obligations and how to prepare
Disclaimer: This article is general information only. It is not legal, financial or compliance advice. HeadStart Docs™ provides free compliance documents, not legal services.
We do not guarantee the accuracy of information provided. Obligations may apply depending on your designated services. Always confirm your specific requirements with a qualified adviser.
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