HRMC guidance
The fit and proper test
Abstract
HMRC carries out the test to make sure you meet the requirements of the Money Laundering Regulations.
The test is a series of checks that apply to you and relevant responsible people running your business.
It forms part of the registration process for:
1. Who the fit and proper test applies to
2. How HRMC carry out the test
3. If you fail the fit proper test
4. Approval
5. If You fail the Approval
6.When the fit and proper test and approval checks take place
7. the test.
1. Who the fit and proper test applies to
You must include responsible persons when you apply to register your money service business or trust or company service.
The fit and proper test also applies to agents of money service businesses and their responsible persons:
The test applies to:
- the person applying to register the business
- the person running the business either on their own or in partnership
- officers of the business, including director and company secretary
- senior managers who are directly engaged in providing the regulated activity
- the nominated officer
- beneficial owners of the business
- a person who is in effect directing the business
- agents of money service businesses and their beneficial owners, officers and senior managers
2. How HMRC carries out the test
If you cannot satisfy HMRC that you’re a responsible person regarding the risk of money laundering or terrorist financing you’ll fail the test.
We’ll ask for evidence of your honesty and integrity to prove you can understand and fulfil your obligations under the regulations.
To reach a decision we’ll consider a range of information including whether you have:
- been convicted of or are being investigated for money laundering or other offences involving dishonesty, fraud or financial crime
- been disqualified from acting as a company director
- been subject to a confiscation order under the Proceeds of Crime Act 2002
- a track record of consistent non-compliance with the Money Laundering Regulations, or with the EU Payments Regulation which applies to money transmission service providers
- been disciplined or expelled by another supervisor or professional body for regulatory or professional failings
3. If you fail the fit and proper test
If you’re registering for the first time and the nominated office fails this test, your application to register will fail.
If you’re renewing your registration or adding a nominated officer who fails this test, you can:
- appoint someone else who already has fit and proper status
- choose a new person to apply for the test
4. Approval
Approval is a separate process from the fit and proper test. Before an individual can hold a position of authority in a business they need approval by HMRC.
5. Who approval applies to
HMRC carries out approval checks when these businesses register for money laundering supervision:
- accountancy service providers
- estate agency or letting businesses
- art market participation businesses
- high value dealer
Approval is similar to the fit and proper process but HMRC makes different checks.
The checks apply to certain individuals who own or hold positions of authority such as:
- senior managers
- officers
- beneficial owners
- sole practitioners
5. If you fail approval
You’ll fail approval if you’ve committed an offence under Schedule 3 of the Money Laundering Regulations.
If you’re registering for the first time and fail approval, your application to register will fail.
We will not register your business if any of the applicants fail approval.
If you’re renewing your registration or adding a new staff member who fails approval, you can:
- appoint someone else who already has already been approved
- choose a new person to apply for approval
6. When the fit and proper test and approval checks take place
HMRC will carry out checks. We will use the information you supply online when you apply to register for anti-money laundering supervision.
There’s no need to apply for a test each year.
But if a new responsible person joins your business after you’ve registered you should sign in to the online service and add their details.
If you’re not yet registered online, you can use form MLR101 to apply for the fit and proper test.
7. The test
HMRC will check the accuracy of the information you provide online.
We will do this by checking those details against information held by:
- HMRC
- other regulatory authorities
- government and law enforcement agencies.
We’ll contact you if we need you to send more information or documents to confirm identification.
If you pass the test, HMRC will continue to monitor your fit and proper or approved status.
May 2020