Money laundering supervision for money service businesses

If you’re already supervised by the Financial Conduct Authority, you do not also need to register with HMRC.

If you applied to register your business after 10 January 2020, you must not run a money service business until HMRC has confirmed that your application has been successful.

The term money service business has a special meaning under the money laundering regulations. Businesses that transfer money (money transmitters) must follow the EU funds transfer regulation in order to reduce the risk of money laundering and terrorist financing.

When you put anti-money laundering policies and procedures in place, you must make sure they cover all your activities carried out under the regulations.

Who should register

You must register your business if it:

• acts as a bureau de change or currency exchange office
• transmits money, or any representation of money, including if your business has an exemption certificate from the Financial Conduct Authority to be a small e-money issuer — just collecting and delivering money as a cash courier is not transmitting money
• cashes cheques that are payable to your customers
• takes payments on telecommunications, digital and IT devices and acts as an intermediary between a payer and supplier
• provides a payment service for utility and other household bills

If you exchange currency or cash cheques occasionally

You do not have to register if you meet all of these conditions:

• currency exchange or cheque cashing is a minor part of, and directly related to, your main activity
• the total turnover from your money service activities is no more than £100,000 a year or 5% of the total annual turnover of your business
• currency exchange or cheque cashing transactions worth more than 1,000 euros are limited to 1 per customer (this could be a single transaction or a series of smaller transactions that seem to be linked)
• the currency exchange or cheque cashing service must only be available to customers of the main business, it must not be available to the public

Transmitting money that’s not ‘by way of business’

If you transmit money from time to time but not ‘by way of business’, you may not have to register.

If you have questions about ‘by way of business’, contact HMRC.

You may not have to register when you:

• travel abroad to personally deliver cash for your customers
• take customers’ personal cheques, written by them against their own account

However, if you carry out other money service business activities, you’ll need to register.

Cash courier

If you collect money from your customers and deliver it to someone else, like re-stocking cash dispensers and delivering cash for shops, you do not need to register.

Consumer credit institutions

If you’re already registered with HMRC for money service business activities, we’ll also supervise your:

• work as a consumer credit institution
• supply of safe custody services

Registering with the Financial Conduct Authority

Money transmitters also have to be registered or authorised by the Financial Conduct Authority under the Payment Services Regulations 2017.

As part of your online application, you will be asked to provide your Financial Conduct Authority Payment Systems Regulator reference. Due to an IT error our online application form will not accept a Financial Conduct Authority Payment Systems Regulator reference of more than 6 digits.

While we work to resolve this issue, in response to the question ‘Have you applied for an FCA PSR registration number?’ you must answer ‘No’. Otherwise we will be unable to progress your application.

We will contact you later in the application process to request full details of your application for registration with the Financial Conduct Authority.

Money service businesses with a credit licence issued under the Consumer Credit Act 1974 must be supervised by the Financial Conduct Authority.

Telecommunication, digital and IT payment service provider

A telecommunication, digital and IT payment service provider acts as an intermediary between a payer and the supplier of goods and services and:

• the payer gives consent to make the payment through any type of telecommunication, digital or IT device
• you receive the payment and transfer it to the supplier of goods and services as an intermediary

The devices in this definition include mobile telephones, laptop, desktop or tablet computers, interactive televisions or similar devices.

You’re not a payment service provider if:

• you simply accept a payment from a debit card or credit card for payment of goods or services you supplied to your customer
• your customer only uses the device to instruct the bank to make a payment and the bank does not transmit the payment through you

Bill payment service providers

A bill payment service provider provides a payment service for utility and other household bills and acts on behalf of the payer. This includes bills for:

• gas and electricity
• water rates and sewage charges
• council tax payments
• household insurance

You’re not a bill payment service provider if you receive a payment on behalf of the payee (the utility company) so that your receipt constitutes settlement of the payer’s debt to the payee.

How to register

You should apply to register with HMRC using the online service. The registration will include a fit and proper test, unless you’re:

• only a bill payment service provider
• a telecommunication, digital and IT payment service provider

You’ll also be able to pay the relevant registration fees online.

Find out more about the fees you’ll need to pay for money laundering supervision.

Annual supervision

At the end of each registration period, we’ll send you an annual supervision notice inviting you to update your registration by paying the annual fee on all your listed premises.

If you do not need your registration to continue, then you should tell HMRC.

If you do not pay the correct fee, then HMRC may terminate your registration and remove your business from our anti-money laundering register.

Get more information

HMRC has published guidance for money service businesses on how to comply with their obligations under the money laundering regulations and related legislation.

The guidance explains what businesses must do to protect themselves from the risks of money laundering and terrorist financing and how to report suspicious activity.

More information is available about recognising and reducing risk of money laundering if you are a money service businesses.

You can also watch recorded webinars to find out more about money laundering supervision.

If you require help on the above, please do not hesitate to speak to a member of our staff by phone, email or drop in at our office for a chat.

Source: HM Revenue & Customs