ECSH45075 - Approvals technical guidance
Approvals
The beneficial owners, officers and managers (BOOMS) of the businesses supervised by EC-S, are generally subject to either a fit and proper test or the approvals check as part of their application to register for anti-money laundering supervision, or as new BOOMs are appointed. The only exception is BPSPs and TDITPSPs who are not required to take either test.
No-one can act as a BOOM unless they have been approved.
Which Sectors does the approval check apply to?
The BOOMS of Accountancy Service Providers (ASPs), Art Market Participants (AMPs), Estate Agent Businesses (EABs), High Value Dealers (HVDs) and Letting Agent Businesses (LABs) are subject to the approvals check.
Who needs to be approved?
The approval process applies to:
- Beneficial owners.
- Officers.
- Senior managers.
- Sole practitioners.
Officers include:
- Nominated officers and directors.
- Company secretaries.
- Chief executives.
- Persons controlling the company.
- Members of the management committee of a corporate body.
- An officer or governing body member of an unincorporated association and any partner.
- A manager, secretary or similar officer of a partnership.
- Any person acting or claiming to act in any of the above roles.
Senior managers include those who:
- Make decisions affecting compliance with the regulations.
- Are responsible for regulated activities.
What is the approval check for?
The approval check is to make sure that the business’ BOOMs are suitable people to carry out those roles and involves checking whether they have an unspent criminal conviction for a relevant offence (i.e. an offence listed in schedule 3 of the Regulations). For more information on spent convictions, see ECSH45025 and ECSH45840.
The approvals check is carried out as part of the initial registration process, and at other times as appropriate. All BOOMs must be approved before we will register the business. Any BOOM that is appointed after registration must also undergo the approvals check. They must submit an approval check application and pay the fee and provide sufficient information to enable EC-S to determine whether the person has been convicted of a relevant offence before they can carry out their role. EC-S may review whether a BOOM has an unspent Schedule 3 conviction at any time.
Although BOOMs can start in their role as soon as their approval application has been submitted, a BOOM must stop work in that role immediately if they fail the approval check (or if they are subsequently convicted of a relevant offence, in which case their approval ceases to be valid).
If the business only has one BOOM and they fail the approval check, it cannot trade.
If the business has more than one BOOM and only one fails the approval check, the business can continue to trade, but the failed BOOM must immediately stop work in that role.
An approval is not valid if the approved person has been convicted of a relevant offence and ceases to be valid if the approved person is subsequently convicted of a relevant offence.
Granting Approval
The approval check is not a fit and proper check. Rather, it is a check focussed solely on whether a BOOM has an unspent relevant conviction. EC-S will grant an application for approval unless the BOOM has been convicted of a relevant offence.
(This content has been withheld because of exemptions in the Freedom of Information Act 2000)
Business Obligations
Businesses must take reasonable care not to appoint an officer or manager or allow them to continue to act unless that person has been approved, or their application for approval is pending, and that any approval given has not ceased to be valid.
This means that the business is required to undertake any necessary checks of officers or managers it appoints to ensure that they do not have a relevant Schedule 3 conviction. The business can do this by undertaking Disclosure and Barring Service (DBS) checks and having a process in place to ensure that where an officer or manager is subsequently convicted of a Schedule 3 offence, the business is notified and takes the relevant action. The business will need to demonstrate to EC-S that the steps it takes are sufficient to ensure that an officer or manager is not appointed or continues to act where they have a relevant Schedule 3 offence.
Where a business uses agents or franchises where the BOOMs are not employees if the principal, the principal is responsible for ensuring the agents have not been convicted of a Schedule 3 offence. We expect the principal to ask the agent to provide the principal with a DBS check on the agent.
A business must also take reasonable care that they do not appoint an officer or manager, or allow them to continue to act, if they have a conviction from another country that would have been a Schedule 3 offence if it were committed in the UK, as per Schedule 3, Part 35.
(This content has been withheld because of exemptions in the Freedom of Information Act 2000)
Informing EC-S of Convictions
If an approved person is convicted of a relevant offence, they must inform EC-S of the conviction within 30 days of the date of conviction. The business the BOOM works for must inform EC-S of the conviction within 30 days of the date the business became aware of the conviction. If a business or BOOM fails to notify EC-S of the conviction, they may be subject to a Type 3 penalty.
For more information on material changes see ECSH47075.
BOOMs acting without Approval
Any person who acts as a BOOM of a relevant business without approval is guilty of a criminal offence, as per regulation 26(12). A person found guilty of an offence under Regulation 26(12) is liable, on summary conviction, to imprisonment not exceeding 3 months and/or a fine. If convicted on indictment, a person would be liable for imprisonment not exceeding two years, and/or a fine.
Under regulation 26(11) if the beneficial owner of a relevant business is convicted of a relevant offence, HMRC can make an application to the High Court (or in Scotland the Court of Session) to order the sale of the beneficial owner's interest in that firm.