A customer asks if someone else can settle their bill, a relative, a business contact, or an overseas company. Accepting payment from a third party who is not your customer is not illegal in itself, but it is a recognised money laundering red flag, and every business needs to handle it carefully. Here is what to watch for in England and Wales.
You can accept third-party payments, but be alert
There is no general ban on receiving payment from someone other than your customer. Businesses do it all the time (an employer paying for an employee, a parent paying for a child). The concern is not the payment itself but why it is being routed that way, and whether it might involve criminal money.
The law that applies to everyone
The Proceeds of Crime Act 2002 (POCA) creates money laundering offences that apply to any business, not just regulated ones. In broad terms, it is an offence to deal with property you know or suspect represents the proceeds of crime. If something about a payment makes you genuinely suspicious, processing it anyway can expose you to liability.
Extra duties for "regulated" businesses
If your business is in a regulated sector under the Money Laundering Regulations 2017 (for example, accountants, estate agents, certain financial and professional firms) you have additional, active duties:
- carry out customer due diligence: identify and verify the customer (and any beneficial owner) and understand the purpose and intended nature of the relationship (checks on source of funds or wealth are required where the risk level or the Regulations make them necessary, especially for enhanced due diligence);
- apply a risk-based approach and enhanced checks for higher-risk situations;
- maintain appropriate anti-money-laundering policies and controls and, where required or appropriate to the size and nature of the business, appoint a nominated officer / MLRO; and
- where money laundering is known or suspected, staff usually make an internal report to the nominated officer / MLRO, who decides whether to submit an external Suspicious Activity Report (SAR) to the National Crime Agency; you must not "tip off" the customer. In the regulated sector the reporting trigger can extend beyond actual knowledge or suspicion to reasonable grounds for knowing or suspecting.
Many regulated firms are supervised by a body such as the FCA or a professional regulator.
Why third-party payments raise flags
A payment from an unconnected third party can be a way to obscure the true source of funds. Watch for:
- payments from someone with no obvious connection to the customer or transaction;
- funds from unexpected jurisdictions or routed through multiple accounts;
- a customer who is evasive about who is paying or why;
- amounts that don't match the customer's profile.
Practical steps
- Have a policy on whether and when you accept third-party payments.
- Ask questions and record the reason and the relationship; keep evidence of source of funds where appropriate.
- For regulated firms, follow your CDP/AML procedures and your nominated officer's guidance, and file a SAR if you suspect money laundering.
- If in doubt, decline the payment or take advice, processing suspect funds is the real risk.
Key takeaways
- Third-party payments are not illegal, but they are a common money laundering red flag.
- POCA 2002 money laundering offences apply to all businesses, regulated or not.
- Regulated firms must also follow the Money Laundering Regulations 2017 (due diligence, risk-based approach, SARs to the NCA).
- Ask questions, document, and decline or report if you are suspicious.
Sources
- Proceeds of Crime Act 2002 (principal money laundering offences)
- Money Laundering, Terrorist Financing and Transfer of Funds (Information on the Payer) Regulations 2017
- National Crime Agency Suspicious Activity Reports; FCA and professional-body AML supervision
--- This article is general information about the law of England & Wales as at 2026, not legal advice. For advice on your circumstances, consult a qualified solicitor or your AML supervisor.