In AML compliance, the “nature of business” of a customer refers to the type of commercial activity the customer carries out. Certain types of business are considered inherently higher risk from a money laundering perspective, regardless of who owns or manages them. This is because some industries are structurally more susceptible to being exploited for illicit purposes: they may deal largely in cash, operate across multiple jurisdictions, involve high-value transactions, lack transparency in their supply chains, or be known historically to attract criminal interest. Common examples of businesses considered high-risk by nature include: cash-intensive businesses (restaurants, car washes, vending operators), gambling and casinos, money service businesses (currency exchanges, remittance providers), precious metals and jewellery dealers, real estate agencies (particularly in luxury markets), private banking, cryptocurrency-related businesses, and companies providing nominee director or trust services.
Under EU law, the 4th AMLD and EBA Risk Factor Guidelines require obliged entities to assess the inherent risk associated with a customer’s business sector as part of their overall customer risk rating. If a customer’s nature of business falls into a recognised high-risk category, it is a factor that should elevate their risk rating and trigger additional scrutiny — typically Enhanced Due Diligence (EDD) measures such as deeper enquiries into source of funds, more frequent transaction monitoring reviews, and closer senior management oversight of the relationship.
