On 15th December 2007 The Money Laundering Regulations 2007 came into force, which means that businesses affected by Money Laundering Regulations must now register with HMRC (unless exempt) and many will also will have to apply for a new ‘fit and proper test’. Deadlines for registration are staggered for different providers, but start as early as February 2008.
Registration fees are paid per premises and there are additional fees for each applicant for a fit and proper test.
What is new?
Since December 15th 2007 many new types of businesses have had to register or re-register with HMRC. These businesses include Trust or Company Service Providers, and Accountancy Service Providers. HMRC already supervises MSBs and HVDs for compliance with existing Money Laundering Regulations.
Any business that has to take action under Money Laundering Regulations (MLR) should have put the right controls in place by December 2007 and must now ensure they register with HMRC (unless they are already supervised by the Financial Services Authority or supervised by a designated professional body listed in the regulations). If the body has not agreed to supervise all relevant activities they will also need to register with HMRC. People who run or own the business and any nominated officer or money laundering reporting officer will in addition need to apply for a new fit and proper test.
Businesses, such as Trust and Company Service Providers (TCSPs) are affected by the Money Laundering Regulations and have to be able to:
- Carry out checks on their customers’ identities
- Identify the risk of money laundering posed by a customer
- Report suspicious activity to the Serious Organised Crime Agency (SOCA)
Businesses affected include:
- Recruitment agencies involved in arranging for someone to act as a permanent or interim director, shadow director or company secretary or partner of a partnership
- Company formation agents
- Suppliers of accommodation or correspondence addresses
- Telephone answering services for businesses other that sole proprietors
- People acting or arranging for others to act as professional trustees, including will writers and family offices.
What are the deadlines?
Registration deadlines have been set for existing businesses (IE those trading on 15th December 2007). The deadlines are:
- 1st February 2008 for Money Service Businesses
- 1st April 2008 for Trust and Company Service Providers
- New MSB, HVD or TCSP businesses formed after 15th December 2007 must register with HMRC before trading
- In addition High Value Dealers will have to re-register. HVDs are businesses that deal in goods and accept (or are prepared to accept) a payment or payments in cash of at least 15,000 euros (approximately £9,000 or more) in total. It does not matter whether the transactions are executed in a single operation or in several operations that appear to be linked, they will still be HVD
- HVD will have to re register with HMRC as part of the annual process by which they renew their registration
- Accountancy Service Providers will also have to register on by 1st July 2008 The Accountancy Service Provider register will open in April and close in October 2008. After that date any new Accountancy Service Provider will have to register with HMRC before commencing trading
- Any new business caught by Money Laundering Regulations must, from 15th December 2007 register with HMRC before they start trading.
Forms
It is important that businesses check the registration summary on the HMRC website to identify when they need to register.
All businesses affected (apart from existing HVDs who will be contacted by HMRC separately) will need to register using the revised MLR100 registration notice and pay the £95 fee. MSBs and TCSPs will, in addition, need to complete the new MLR101 fit and proper form for all relevant people within the business as part of their registration application. There will be a £50 fee for each applicant within the business who needs to be tested fit and proper.
The fit and proper test
A fit and proper test will be applied to those who effectively run, or are the beneficial owner of a money service business or a trust or company service provider. The test will check individuals against a number of objective criteria set out in the new Money Laundering Regulations. The intention is to deny the riskiest individuals access to the Money Service Businesses (MSBs) and Trust or Company Service Providers (TCSPs) sectors. HMRC will perform these checks at registration using an array of internal and external information sources. If any of these criteria are met, HMRC will have to refuse the application.
The fit and proper test will be applied to all money service businesses and trust or company service providers, at the time of registration, in respect of:
- The applicant
- A person who effectively directs or will direct the business
- A beneficial owner of the business
or
- Any nominated officer of the applicant.
In practice, this means all sole proprietors, partners; directors and nominated officers will need to be tested, as will certain shareholders and trustees.
Each applicant that needs to apply for a fit and proper test will need to complete form MLR 101. Each applicant will need to sign their form, and you will then need to return them with your registration application and the appropriate fee(s). It is a criminal offence to make a false statement in order to register. Applicants will not be registered if the information provided is found to be false or misleading.
