ECSH63325 - Regulation 10 - Credit institutions and financial institutions

Category Heading	Description
The Law	Regulation 10 - Credit institutions and financial institutions
What it means	Defining the relevant activity of a credit or financial institution and assist establishing who the supervisory authority is.  Providing reference to other relevant legislation which further defines these activities and helps establish who the supervisory authority is.
Purpose	Provide a definition of what a credit or financial institution is under the MLR 2017 by detailing what activities they undertake.
Time Line	These were defined in MLR2007; Regulation 3(2) & 3(3)  These were defined in MLR2003; Regulation 2
What to establish	What is the relevant activity being undertaken?  Who is the correct supervisory authority for that activity?  Does the corresponding authorisers register show the correct permissions/authorisations? (If a business states they only deal in E-money, is this evidenced on the FCA register?)
How to test and evidence to obtain	Obtain a clear explanation of all activities being undertaken and whether any are offered by a third-party.  Obtain copies of contracts, T&Cs, agreements, etc. which may set out 'credit terms' or similar.  Does the corresponding authorisers register show the correct permissions/authorisations? (If a business states they only deal in E-money, is this evidenced on the FCA register?)
Best Practice	Sector specific information:
AMP	N/A
ASP	N/A
EAB	N/A
LAB	N/A
HVD	N/A
MSB	Understanding who the supervisor should be falls into 4 scenarios;  1. An MSB that is a money transmitter must be authorised by the FCA, where this is their only authorised activity, HMRC is their supervisor.  2. An MSB that carries out other activity authorised by the FCA is supervised by them, even if they are also a money transmitter.  3. An MSB that doesn’t carry out any other authorised activity is supervised by HMRC.  4. An MSB that is supervised by the FCA and carries out other activity under the MLR that would be supervised by HMRC (such as also acting as an EAB) must be supervised by both HMRC and the FCA. We may agree with the FCA that one supervisor will supervise all their activity (usually the FCA).
TCSP	N/A
Further Reading	Consumer Credit Act 1974  Capital Requirements Directive - Annex 1  MSB Guidance  General interpretation - Regulation 3  Timing of verification - Regulation 30  Application of simplified due diligence -Regulation 37
FAQs	If an MSB carries out money transmission activity as well as electronic money (e-money) services, should they be registered with HMRC or the FCA?  Although the business carries out money transmission, as they also offer e-money (an activity authorised by the FCA), they should not be registered with HMRC as they will only be registered and supervised by the FCA.