Under the Money Laundering, Terrorist Financing and Transfer of Funds (Information on the Payer) Regulations 2017 (MLR 2017), people who carry out certain roles within regulated businesses must undertake a fit and proper test.
Various regulators include such checks as part of the approval process to assess whether the people who oversee the anti-money laundering (AML) and counterterrorist financing (CTF) aspects of a business are appropriate to fulfil their roles.
In this blog, we answer some frequently asked questions about HMRC’s fit and proper test.
What is the fit and proper test?
HMRC’s fit and proper test is carried out as part of the regulator’s anti-money laundering (AML) supervision registration process.
The test is used to assess an applicant’s suitability for various roles within a company and considers whether they will perform their duties in the appropriate way.
HMRC requires an applicant, and a company’s beneficial owners, officers and managers (BOOMs) to pass its fit and proper test before it will register the business.
HMRC will also carry out fit and proper checks after you have registered as part of its supervisory function.
Who needs to take the fit and proper test?
HMRC’s fit and proper test must be undertaken by applicants and BOOMs of:
- Money service businesses (MSBs).
- Trust or company service providers (TCSPs).
BOOMs include:
- Individuals who are running the business.
- Directors and company secretary.
- Managers engaged in the development, provision or monitoring of policies and procedures related to regulated activity.
- Nominated officer.
- Beneficial owners.
Other businesses that are regulated by HMRC, including accountancy service providers, art market participants, estate agency businesses, high value dealers and letting agency businesses are subject to other approval checks.
What does HMRC’s fit and proper test involve?
There are three parts to HMRC’s fit and proper test:
Part 1
HMRC will test if an applicant or a BOOM has an unspent conviction for a relevant offence as listed under schedule 3 of the MLR 2017. If this is the case, it will result in automatic failure.
Part 2
HMRC will consider whether there has been a consistent failure to comply with the regulations by the business or the relevant BOOM. The regulator will also assess the level of risk that the business may be used for money laundering or terrorist financing.
If there has been a long history of non-compliance with the regulations, or a business has failed to comply with a range of requirements under the regulations, it may mean you fail the test.
Part 3
Part 3 of HMRC’s fit and proper test looks more widely at:
- Honesty and integrity.
- Skills and experience.
- Financial soundness, including tax affairs.
How do you take HMRC’s fit and proper test?
You can apply online direct with HMRC for the fit and proper test as part of the registration process for money-laundering supervision.
For more information about registering with HMRC for AML supervision, including guidance and forms, click here.
How much does the fit and proper test cost?
HMRC charges £150 per person for the fit and proper test.
More information about HMRC’s fit and proper test is available on gov.uk by clicking here.
Compliance Solutions for Regulated Businesses
At the Regulation & Compliance Office (RACO), we can help organisations of all shapes and sizes from across different sectors undertake a review of their policies, controls, and procedures to ensure that they are compliant with AML regulations and, therefore, avoid any breaches.
A review of this nature provides valuable insight into a business when performed correctly. Along with an overview of risk, these crucial assessments also highlight issues within the business, so it is essential to undertake a proper review. All of a company’s building blocks must be considered, including its staff, clients, operations, and finances.
By working with the Regulation & Compliance Office, a business can be assured that we will bring the required level of knowledge and expertise needed to perform the review, which adds value to the business and is not simply a box-ticking exercise. Our team can also provide a full range of services that include:
- Consultancy.
- Compliance Policies.
- Training.
- Handbooks.
- Auditing.
Our services focus on businesses’ anti-money laundering and regulatory requirements through the implementation of effective policies, procedures, training, and consultancy. We also provide continued monitoring of staff and ongoing training to ensure that everyone within a business is aware of the latest requirements and complies with their responsibilities.
We offer a full range of services focused on ensuring businesses across all regulated sectors create, maintain and evidence their compliance with the requirements of their regulators and legislation. We work with businesses of all sizes, from the smaller high street or niche businesses to the large multi-office and multinationals.
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We adopt a sensible and pragmatic approach to fees, ensuring we are competitive and always add value. As necessary, we will agree on packaged services to control cost and enable clients to spread payments to alleviate cash flow, yet ensure services are provided when needed.
If you want to discuss our services in more detail, contact us at 0203 985 8550, email us at info@regulationandcomplianceoffice.co.uk or complete an enquiry form.
