ECSH45035 - Reconsideration of fit and proper

Background

This page should be read in conjunction with ECSH45030 on the fit and proper test.

Under regulation 58 of the Money Laundering, Terrorist Financing and Transfer of Funds (Information on the Payer) Regulations 2017 (MLR 2017), HMRC must refuse to register an applicant for registration if the business and any beneficial owner, officer or manager of the business (BOOM(s)) is/are not fit and proper (F&P) to carry on that business.

HMRC can reconsider a determination that a BOOM/business is determined to be F&P at a later stage.  That review may determine that the individual/business is no longer F&P.

If a BOOM is determined not to be F&P, they can no longer undertake any role requiring them to be F&P within a relevant business.

If a business is determined not be to F&P, it must cease all relevant activity.  HMRC will write to the business notifying the business of the cancellation of its registration and requirements for it to wrap up supervised activity.

 

Circumstances in which reconsidering F&P may be appropriate

If at any time after a BOOM/business is determined to be F&P, HMRC establish that the following now applies, it may be determined that the BOOM/business is no longer F&P:

  • They have consistently failed to comply with requirements of MLR 2017 or any previous iterations of money laundering regulations.
  • The business is at risk of being used for money laundering or terrorist financing (ML/TF).
  • The business or any BOOM of the business does not have adequate skills and experience and has acted or may be expected to act without probity.
  • A BOOM has been convicted of an offence listed in Schedule 3 of MLR 2017.

The above scenarios also include the BOOMs of an agent or agents of MSBs.  HMRC expects that the principal undertakes a full F&P test, by referring to the HMRC guidance, on any agent that it intends to onboard. For more information see the HMRC F&P guidance.

HMRC can and may undertake its own F&P test on any agent or BOOMs of an agent, to determine whether they are F&P. This does not absolve the principal of responsibility for testing its own agents. A principals’ onboarding process may have a significant impact on HMRC’s consideration of whether the principal business is fit and proper.

 

Factors to consider when reconsidering F&P

When conducting a reconsideration of F&P on a BOOM/business, the same test is applied as an initial F&P consideration.

Where we find that a BOOM/business is not F&P, we may suspend and/or cancel the business’ registration. For more information see pages ECSH45030 and ECSH83580.