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 to register 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 notice issued under regulation 57(3) of The Money Laundering, Terrorist Financing and Transfer of Funds (Information on the Payer) Regulations 2017 (MLR 2017). 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 failing the F&P test

When refusing the MSB agent for failing the F&P test, 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.