ECSH47535 - Refusing an MSB agent - when to contact a principal

Introduction

A Money Service Business (MSB) registered with HMRC for anti-money laundering supervision can appoint another business to operate on its behalf as an agent. The business that is registered with HMRC is referred to as a principal and any business that it appoints to operate on its behalf is its agent.

Some MSBs will register with HMRC for anti-money laundering supervision while operating as an agent of another MSB. For example, a MSB that acts as a money transmission agent may apply to register with HMRC as a currency exchange provider in its own right.

When you refuse a MSB due to the determination that a business or any of its beneficial owners, officers or managers (BOOMs) are not fit and proper (F&P), you should establish if the business operates as an agent of a principal MSB and send a letter to this principal MSB advising that its agent has failed the F&P test.  The letter should not contain any information regarding the reason for the F&P failure. The principal can determine the reason for refusal by contacting its agent, in the event the agent hasn’t already notified them of the F&P failure.

You should not contact a principal when an agents’ registration has been refused for reasons unrelated to the F&P test. For example, failure to respond to a Regulation 57(3) Notice. This is because an agent does not need to have a registration in their own right, in order to act as an agent. We would contact the principal of an agent if the agent is found to not be F&P, as the principal will need to determine the appropriate action it needs to take as the principal business.

How to establish if a MSB acts as an agent

You should search the Financial Conduct Authority’s (FCA) Financial Services Register to establish if a business is acting as a money transmission agent. (This content has been withheld because of exemptions in the Freedom of Information Act 2000)

 

How to inform a principal firm that its agent has been refused for F&P failure

When refusing the MSB agent for F&P failure, you should set a reminder to contact its principal firm 30 days after the date the notice to refuse was issued to the business and take the following action:

  • If the business requests a review of the decision, you must not contact the principal until the result of the review is determined.
  • If the decision is upheld at review, you should send a letter notifying the principal firm that its agent has been refused as it has failed the F&P test.
  • If the decision is overturned at review, you do not have to take any further action.
  • If the agent does not request a review within 30 days- you should send a letter to its principal firm notifying that its agent has been refused as it has failed the F&P test.