ECSH44383 - The fit and proper test
What is the fit and proper test?
The fit and proper (F&P) test is conducted by HMRC to ensure that an applicant (the business), and its beneficial owners, officers and managers (BOOMs) are suitable people to carry out those roles.
BOOMs of the sectors below must undergo the F&P test:
· Money service Businesses (MSBs)
· Trust or Company Service Providers (TCSPs)
A business cannot trade as an MSB or TCSP until it has passed the F&P test.
Three parts of the test
1. The authorisations caseworker will contact Risk and Intelligence Service (RIS) to request a check of the applicant and its BOOM’s criminal record. If a Schedule 3 conviction is identified, the applicant or BOOM must fail the F&P test and the relevant person’s application for registration must be refused.
2. HMRC will inspect internal systems, information and documents provided by the business and its BOOMs , information available from third parties and open-source information to determine if the applicant or its BOOMs have consistently failed to comply with the Money Laundering, Terrorist Financing and Transfer of Funds (Information on the Payer) Regulations 2017 (MLR 2017) or there is a risk that the applicant may be used for money laundering, terrorist financing or proliferation financing.
3. HMRC will also consider the following factors when determining F&P:
Outcomes of F&P
Approval
Where both the business and it’s BOOMs have passed the F&P test, the authorisations caseworker will approve the application on ETMP. The business will receive a secure communication via its government gateway account to advise that its registration has been approved.
Every BOOM that has undergone the F&P test will also be issued a determination letter.
Business F&P failure
Where the decision is made that the business is not F&P, HMRC must refuse to register the business. HMRC will issue a notice to the business stating that it’s application for registration has been refused. Any BOOMs that have also failed the F&P test will be issued a determination letter.
Any BOOMs not tested will be left undetermined - see ECSH45822 .
BOOM F&P Failure
Where any BOOM fails the F&P test, the registration must be refused. HMRC will issue a notice to the business to advise that its application for registration has been refused because, at least one of, its BOOM is not a F&P person. The BOOM will be issued a determination letter setting out the reasons for the decision that it is not F&P.
All other BOOMs will be left undetermined - see ECSH45822