Money Laundering Regulations | A Fit and Proper Person
We have published several articles on the strict duties and obligations imposed by The Money Laundering, Terrorist Financing and Transfer of Funds (Information on the Payer) Regulations 2017 (‘Money Laundering Regulations’). In a previous article on this subject, we explained the 'due diligence' measures that must be adopted by the 'relevant person'.
Building on these previous articles, this article we will provide an overview of the provisions that define what constitutes as ‘a fit and proper person’ under the Regulations concerning relevant persons.
Sections 54, 58 and 59 of the Money Laundering Regulations make provision for the maintenance of registers of certain relevant persons, the provision of ‘a Fit and proper test’ to ensure the suitability of applicants for registration and the ‘Determination of applications’.
John Veale of KANGS outlines these statutory requirements.
The Money Laundering Regulations
Regulation 54. Duty to maintain registers of certain relevant persons
The FCA must maintain a register of those relevant persons who:
- are authorised persons, and
- have notified the FCA under Regulation 23 that they are acting, or intend to act, as a money service business or a trust or company service provider.
The Commissioners must maintain a register of those relevant persons who are not included in the register maintained by the FCA and are:
- high value dealers,
- money service businesses,
- trust or company service providers,
- bill payment service providers, for which the Commissioners are the supervisory authority,
- telecommunication, digital and IT payment service providers, for which the Commissioners are the supervisory authority.
A registering authority may publish or make available to public inspection all or part of a register maintained by it under this Regulation.
Regulation 58 - Fit and proper test
The registering authority must refuse to register an applicant for registration in a register maintained under Regulation 54 as a money service business or as a trust or company service provider, if it is satisfied that:
- the applicant,
- an officer or manager of the applicant,
- a beneficial owner of the applicant, or
- where the applicant is a money service business, any agent used by the applicant for the purposes of its business or any officer, manager or beneficial owner of the agent,
is not a fit and proper person to carry on that business.
A person who has been convicted of a criminal offence listed in Schedule 3 to the Regulations is to be treated as not being a fit and proper person to carry on the business as a money services business.
In those circumstances where a person has not committed a criminal offence, then, when considering whether an applicant is a fit and proper person regard must be had to:
- any consistent failure to comply with the requirements of any Money Laundering Regulations,
- the risk that the applicant's business may be used for money laundering or terrorist financing,
- where the applicant is a money service business, whether any officer, manager or beneficial owner has adequate skills and experience and is fit and proper to carry on the business.
Regulation 59 - Determination of applications for registration.
Subject to Regulation 58, the registering authority may refuse to register an applicant if:
- any imposed requirement has not been complied with,
- information provided is false or misleading,
- the applicant has failed to pay any specified penalty or charge,
- any supervisory body opposes the registration on reasonable grounds,
- it is suspected that the applicant will fail to comply with any of the Regulations, Part 3 of the Terrorism Act 2000 or Parts 7 and 8 of the Proceeds of Crime Act 2002,
- the applicant has identified any officer or manager who will fail to comply with any of the relevant obligations.
Who Can I Contact for Advice & Help?
Amongst other investigations, HMRC can conduct a 'Fit and Proper Person' review at any time. Any default may result in the closure of a Money Services Business, or disrupt services provided by an IT payment services provider, as well as those previously mentioned.
As part of an HMRC investigation, they will request a variety of commercial and due diligence documents and will conduct a thorough investigation into all aspects of the business and its personnel.
If your business becomes the subject of an HMRC investigation, it is essential that you immediately seek experienced professional advice.
At KANGS we provide a wealth of experience in dealing with investigations conducted by HMRC of every nature. Our Team, which enjoys an enviable nationwide reputation, would be delighted to assist you.
If you need legal advice or assistance, we are here to help, please do not hesitate to contact us using the details below:
Tel: 0333 370 4333
Email: info@kangssolicitors.co.uk
We provide initial no obligation discussion at our three offices in London, Birmingham, and Manchester. Alternatively, discussions can be held through video conferencing or telephone.
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