When you register as a principal under the regulations, the responsible persons must apply for a fit and proper test as part of the process. If you pass the test, HMRC will continue to monitor your fit and proper or approved status. HMRC looks at history of failure to comply with the money laundering regulations (2017, 2007, 2003 or 2001) which is a judgment issue. FIT Contents Fit and Proper test for Employees and Senior Personnel sourcebook FIT 1 General 1.1 Application and purpose 1.2 Introduction 1.3 Assessingfitness and propriety FIT 2 Main assessment criteria 2.1 Honesty, integrity and reputation 2.2 Competence and capability 2.3 Financial soundness An applicant that has an unspent conviction as listed in schedule 3 of the regulations will automatically fail the fit and proper test. You will also be asked a series of questions at registration. You must tell HMRC if you find out that any responsible persons in your business no longer meets the requirements of the fit and proper test, and confirm you have removed them from working in a position that requires them to be fit and proper. To help us improve GOV.UK, we’d like to know more about your visit today. When an individual or company registersRead more References to regulatory bodies includes any bodies in the UK or overseas whose role now or in the past included ensuring compliance with any anti-money laundering law, regulation or other measure. The 'fit and proper persons' test is a statutory requirement. You can change your cookie settings at any time. The test is a series of checks that apply to you and relevant responsible people running your business. Redvers Close Any manager who is not a member will not be considered to be a fit and proper person. A principal can face a civil penalty if an agent is appointed without being screened on their skills, knowledge and expertise to carry out a regulated activity. If you’re not yet registered online, you can use form MLR101 to apply for the fit and proper test. (3) whether the person has adequate time and other resources of any kind available to them in order to perform the role and meet the responsibilities associated with that role. (12) whether, in the past, the person has been candid and truthful in all his dealings with any regulatory body and whether the person demonstrates a readiness and willingness to comply with the requirements and standards of HMRC and with other legal, regulatory and professional requirements and standards. This publication is available at https://www.gov.uk/government/publications/money-laundering-supervision-fit-and-proper-test-and-approval/money-laundering-supervision-guidance-on-the-fit-and-proper-test-and-hmrc-approval. For example any matters that cast doubt on the: When disclosing any matters under this requirement you may also, if appropriate, make representations explaining why the individual should now be treated as fit and proper. If the address is not shown on the identity documents other documentation is needed to confirm the home address. To view this licence, visit nationalarchives.gov.uk/doc/open-government-licence/version/3 or write to the Information Policy Team, The National Archives, Kew, London TW9 4DU, or email: psi@nationalarchives.gov.uk. You will have to provide the full name, residential address, and date of birth for each individual concerned. They must make full and frank disclosures of any material that may be relevant and declare any convictions of a relevant offence. The £130 fee to register a premise is increasing to £300, as well as the annual renewal fee. There’s no need to apply for a test each year. Any dishonesty in an application will also be taken into account in deciding whether those concerned are fit and proper. You also have a network of 10 agents. You could be liable to prosecution if you provide false or misleading information. LS16 6RQ. The fact that a person may be of limited financial means will not, in itself, affect his suitability to perform a role. The fit and proper test does not apply to the senior manager responsible for recruitment, because he does not make decisions affecting compliance and is not directly responsible for the provision of regulated activity. Responsible persons subject to the fit and proper test (a money service business, agent or trust and company service provider) can for convenience apply the fit and proper test in 2 phases: If the individual has an unspent schedule 3 conviction they cannot pass the fit and proper test. If you’re not approved you must not act as a: HMRC will not register your business while you continue to occupy a position of authority. Individuals should continue to be transparent after they have passed the fit and proper test or the approval process. (2) whether the person has demonstrated by experience and training that the person is suitable, or will be suitable if approved, to perform the role. The approval is part of the registration process. This guidance is for trustees of charities (including directors of corporate trustees), directors of corporate charities, any employees of a charity and volunteers who: 2. If the person not approved is the nominated officer, you can appoint someone else to the position. How HRMC carry out the test. For example, you will fail if you’ve been convicted of a relevant offence. HMRC won’t register your business if you fail the test and while you continue to occupy a position of authority. HMRC assumes that all persons appointed as scheme administrators are fit and proper persons unless they hold or obtain information which calls that assumption into question. fit and proper persons test to particular managers, HMRC will take account of the likely impact on the charity’s tax position. An agent provides a particular service on behalf of another business. HMRC cannot register your business if any applicants fail to pass the test. This publication is licensed under the terms of the Open Government Licence v3.0 except where otherwise stated. Encourage all your managers to read the “HMRC Fit and proper help-sheet”. The fit and proper test also applies to agents of money service businesses and their responsible persons: 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. HMRC will not normally require the candidate to supply a statement of assets or liabilities. If your business also carries out the activities of a money service business or trust and company service provider you’ll also need to apply for the fit and proper test. HMRC cannot register a principal unless it’s satisfied that responsible persons in the business and its agents are fit and proper. HMRC has issued revised guidance on the fit and proper persons test, which a charity must satisfy under the new definition of "charity" for tax purposes, introduced by the Finance Act 2010. When your registration is renewed during the normal annual registration renewal process you’ll be asked to identify any senior managers who must now take the fit and proper test. These are to make sure that businesses beneficial owners, officers and senior management are suitable people to undertake those roles. The ‘fit and proper persons’ test is a statutory requirement, and applies to all charity tax reliefs administered by HMRC. This will be considered only in relation to a person’s continuing ability to perform the particular role for which the person is or is to be employed. For example, if you’ve received a prison sentence of more than 4 years, the conviction will never become spent, but cautions become spent immediately (apart from conditional cautions which will become spent after 3 months). HMRC carries out the fit and proper test as part of the money laundering supervision registration process for: HMRC uses information already held and information from other sources to carry out the checks. A letter from Work and Pension Committee chair, Stephen Timms, said pension scam victims had cited a scheme’s registration with HMRC as a “crucial factor” in their decision to transfer, and he asked HMRC what action it had taken to prevent this in future. It forms part of the registration process for: You must include responsible persons when you apply to register your money service business or trust or company service. It’s your responsibility as a money service business principal to make sure your agent and your agent’s responsible persons are fit and proper. Don’t worry we won’t send you spam or share your email address with anyone. If you pass the test, HMRC will continue to monitor your fit and proper status. HMRC have updated the guidance for charities on the Fit and Proper Persons Test. If the individual is already on the list they do not need to reapply for fit and proper status unless their circumstances have changed in a way that may affect the test result. A spent conviction is a conviction which, under the terms of Rehabilitation of Offenders Act 1974, can be effectively ignored after a specified amount of time. It’s also good practice for a principal to make sure his agents meet their obligations to check their own employees. Your beneficial owner(s) and directors will already have taken the fit and proper test, and do not need to retake it. If HMRC receives an application from a UK resident but cannot confirm their identity we will contact the applicant to send a government issued document with their: Non-UK residents also need to send documents to confirm their: HMRC accepts documents issued by a government to confirm identity, for example a valid passport or valid full or provisional driving license which may also confirm the address. However you’re able to appoint another person. To reach a decision we’ll consider a range of information including whether you have: If you’re registering for the first time and the nominated office fails this test, your application to register will fail. You do not have to apply every year but if a new person joins your business they’ll have to take a test if it applies to them. An independent professional person can be a: The independent person who certifies it should include on the document: HMRC Anti Money Laundering Supervision If you’re registering for the first time and fail approval, your application to register will fail. The checks apply to certain individuals who own or hold positions of authority such as: You’ll fail approval if you’ve committed an offence under Schedule 3 of the Money Laundering Regulations. The help-sheet includes the model fit and proper declaration. Information about the new approval process has been added. This guidance has been updated to reflect legislation changes effective from 26 June 2017. For example any person who has no dealings with HMRC and no control over spending charity funds, even if the person is not a fit and proper person, is unlikely to affect the charity’s eligibility to tax reliefs. An individual is 'a fit and proper person' if they ensure, or are likely to ensure, that charity funds and tax reliefs are used only for charitable purposes. Non-payment of registration fees will also result in refusal of your application. HMRC is happy to consider accepting other methods as long as the results achieved can be shown to be equally robust. To help us improve GOV.UK, we’d like to know more about your visit today. HMRC carries out approval checks when these businesses register for money laundering supervision: Approval is similar to the fit and proper process but HMRC makes different checks. Don’t include personal or financial information like your National Insurance number or credit card details. Before an individual can hold a position of authority in a business they need approval by HMRC. The £100 fee for a fit and proper test is also increasing and from 1 May will cost £150. (This does not preclude the person being involved in requests for reconsiderations of rulings or decisions, appeals or similar proceedings in respect to matters of liability to taxes etc). HMRC has now published guidance on the "fit and proper person" test. If you or a key person in your business, have been, or are later convicted, of a relevant offence: The approval becomes invalid from the date of conviction. If a new person joins your business after you’ve registered under the regulations they’ll have to apply for a fit and proper test if they’re a key person. Following a phonecall from HMRC to confirm that I was complying with the MLR regulations etc, I have today received a letter advising that as I form companies on behalf of clients through Companiesmadesimple then I should also be registered as a TCSP and pay an additional £50.00 fee together with completion of a form MLR101. HMRC will also have regard to whether any taxes, duties, levies or similar sums due were paid by the due date. Principals and agents who carry out this check must: A principal that does not screen their agent with due care is unlikely to be seen as fit and proper themselves. HMRC is increasing its anti-money laundering supervision fees from 1 May to fund enhancements to the service. HMRC stress that neither of these requirements test whether the business is professionally run or operated. The fit and proper test and HMRC approval technical guidance Find out about the money laundering supervision fit and proper test and HMRC approval. (2) whether the person has been the subject of any adverse finding or any settlement in civil proceedings, particularly in connection with any financial business, misconduct, fraud or the formation or management of a body corporate. The owners' and directors' test (also known as the " fit and proper person test ") is a test that is applied to directors and prospective directors of English football clubs to ensure those appointed are appropriate people to act as directors of football clubs. You’ll fail the test if you cannot satisfy HMRC that you’re a fit and proper person with regard to the checks above. You may be liable to imprisonment for a term not exceeding 2 years or a fine. If you’re renewing your registration or adding a nominated officer who fails this test, you can: Approval is a separate process from the fit and proper test. Who has to be a fit and proper person? You may make representations at the same time as the disclosure, to explain why you consider the individual concerned should still be treated as fit and proper. HMRC can exercise its discretion to allow relief even where the fit and proper persons test has been breached, where a charity can show it made a genuine mistake and there has been no misuse of charity tax reliefs. how to apply for fit and proper test under the money laundering regulations january 2008 HMRC will decide whether it can register your business when you fill in the MLR101 form. It’s important that money service business principals take effective steps to prevent individuals with schedule 3 convictions from becoming or remaining relevant persons at their agents. Where HMRC finds a manager of a charity is not a fit and proper person, a charity will not necessarily lose entitlement to the charity tax reliefs. It’s your responsibility to make sure your agent(s) and the agent’s beneficial owners, officers and senior managers are fit and proper. They must disclose any change or development to HMRC that affects their fit and proper or approval status. You should not continue to use a money service business agent unless you’re satisfied that all the responsible persons are fit and proper. The ‘fit and proper persons’ test is a statutory requirement, and applies to all charity tax reliefs administered by HMRC. If you have agents you need to make sure that the beneficial owners, officers and senior managers are fit and proper. We may check managers, officers, beneficial owners and sole practitioners at any time after registration to make sure they should continue to be approved. Responsible persons at your business must be approved as part of your business registration process. a person who is not appointed as a director but still acts as if they were a director and: makes decisions about the policies and direction of the business, is part of a board, or group that makes decisions about the business direction, makes financial decisions on behalf of the business, is a signatory to the bank account for the business, decides how much credit can be given to customers, has significant staff management - for example you may have overall management of the business or you may direct staff on how they do their job, appoints and dismisses employees on behalf of the business, managers who make decisions affecting compliance and are responsible for regulated activities, individuals employed by the principal to oversee or manage the screening and propriety of their money service business agents, make sure your agents understand the new requirements of the regulations, have a policy and procedures in place so you can screen your agents before your application for a fit and proper test is submitted to HMRC, carry out and keep a record of appropriate enquiries to satisfy yourself that responsible persons of your agents will pass the fit and proper test, keep an up to date list of agents with their details, to allow HMRC to carry out its own checks, accept money transmission instructions from customers, see original documents that prove the agent’s right to work in the UK, such as a valid passport or visa, check the documents are valid in the presence of agent, take and keep copies of the documents with a note of the date when they were seen, financial soundness including tax affairs, Money Laundering Regulations registration number of the business where they were given fit and proper status, current council tax demand letters or statements, or their overseas equivalent, a statement that the document is ‘Certified to be a true copy of the original seen by me’ , and where appropriate, ‘This is a true likeness of the person’, an official stamp of the person certifying, member(s) of the management committee of a corporate body, an officer or governing body member of an unincorporated association and any partner, manager, secretary or similar officer of a partnership, any person claiming to act in any of the above roles, you must tell HMRC within 30 days of the date the business became aware of the conviction, the individual must also tell HMRC within 30 days of the date of conviction, whether you’re an existing business or a new registration, whether you’re a money service business and if you have agents, have consistently failed to comply with the current or previous Money Laundering Regulation, are not fit and proper for a reason, set out in, honesty and integrity of the individual, such as any disciplinary proceedings or dismissal (see, competence or capability of the individual (see, financial soundness of the individual (see, you must tell HMRC who your money service business agents are, you can only appoint, nominate or list a money service business agent if you’ve satisfied yourself that all the responsible persons at the agent are fit and proper. Information has been added to explain what happens if applicants don't pass the HMRC approvals test. If they’re in any doubt about whether something is relevant or needs to be declared they should contact HMRC. We also use cookies set by other sites to help us deliver content from their services. In Michael Hunt v HMRC TC04183 the First Tier Tax Tribunal (FTT) considered what is meant by the term “fit and proper person” for the purposes of registration under the Money Laundering Regulations 2007.. Mr Hunt applied for registration as beneficial owner of a company which provided virtual office services. If they have they cannot be approved. We have updated 'If you fail the fit and proper test' and 'If you fail approval', and have
This is a broad test, and the issues that need to be considered are whether they: Where an individual may not be fit and proper because of any issue covered in Appendix 1, including any unspent convictions for offences not listed in schedule 3, they must be declared to HMRC. We will tell you within 45 days of receiving your application if we will register or refuse to register your business. Failure to be a member of an approved scheme is also a legal offence with fines of up to £5000 If you’re an existing accountancy service provider, estate agency business or high value dealer already on the HMRC anti-money laundering register. You have the right to ask for a reconsideration of a decision or to appeal the decision to refuse registration. HMRC advises registered businesses to carefully avoid using language in this context that might give the impression that registration was a form of endorsement or recommendation. Find out who the fit and proper test and approval applies to and how HMRC checks on your business. The more serious the conviction, the longer the period of rehabilitation. (9) whether the person, or any business with which the person has been involved, has been investigated, disciplined, censured or suspended or criticised by a regulatory or professional body, a court or Tribunal, whether publicly or privately. You cannot trade in a regulated sector if HMRC refuses to register your business, until the decision is reviewed. Where we have identified any third party copyright information you will need to obtain permission from the copyright holders concerned. Apply online when you register for anti-money laundering supervision. The fit and proper test applies to the following responsible persons: As the principle you must make sure the 10 agents of your money service business, as well as their beneficial owners and senior managers are fit and proper. Most businesses supervised by HMRC for anti-money laundering purposes are subject to either the fit and proper test or approval requirements under the regulations. You need to contact HMRC if, after passing the fit and proper test, you’re convicted of a relevant offence or anything else happens that may impact your fit and proper status. (7) whether, as a result of the removal of the relevant licence, registration or other authority, the person has been refused the right to carry on a trade, business or profession requiring a licence, registration or other authority. Responsible people in your organisation will have received a letter from HMRC confirming that they have: HMRC carries out the test to make sure you meet the requirements of the Money Laundering Regulations. If you’re an existing money service business principal and propose to appoint a new agent. 4. The 'fit and proper persons' test exists to ensure that charities, CASCs and other organisations entitled to charity tax reliefs are not managed or controlled by individuals who might misuse the valuable tax reliefs the organisation receives. If you need to send extra information, the deadline for giving you the decision will be extended. Approval is a separate process to the fit and proper test. We may also ask for additional information. (3) whether the tax affairs of the person or any business or other entity owned, controlled, or managed by them, are up to date, in that declarations or returns due from them have been made by the due date. Why is there a 'fit and proper persons' test? HMRC will not process your application for registration if one or more of the applicants from your business fail the fit and proper test. The introduction has been updated with more information on what existing customer will be asked to provide when they log in to the anti-money laundering supervision. (10) whether the person has been dismissed, or asked to resign and resigned, from employment or from a position of trust, fiduciary appointment or similar. … Responsible persons must pass the relevant test before the business can register, and remain registered, with HMRC. The fit and proper person test applies to the scheme administrator of a registered pension scheme. A money service business principal must check the right to work status of an agent before appointment. HMRC will test if an applicant has an unspent conviction for a relevant offence. It’s your responsibility as a money service business principal to make sure your agents and their beneficial owners, officers and managers are fit and proper.