Money laundering supervision: the fit and proper test and approval
Find out about the checks applying to money service businesses and trust or company service providers.
The fit and proper test is a series of checks carried out by HM Revenue and Customs (HMRC) to make sure that you and certain people involved in running your business meet the requirements of the Money Laundering Regulations.
When you register your business, responsible persons must be included in your application. The fit and proper test also applies to agents of money service businesses and their responsible persons:
The fit and proper 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 engaged directly in the provision of regulated activity
- the nominated officer
- a ‘beneficial owner’ 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
When the test takes place
HMRC will carry out checks using 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. However if a new responsible person joins your business after you’ve registered online you should sign in to the online service and add their details.
If you’re not yet registered online for anti-money laundering supervision and you want to add another responsible person who:
- has not passed the fit and proper test previously, complete and send form MLR101
- already has fit and proper status, complete and send form RCT1
HMRC will check the accuracy of the information you provide online.
This will include checking those details against information held by us, other regulatory authorities, government and law enforcement agencies.
We will contact you if we need you to send additional information or documents to confirm identification.
If you pass the test, HMRC will continue to monitor your fit and proper status.
We won’t register your business if any of the applicants fail the test.
If you fail the test
If you can’t 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:
- are being investigated or have been convicted of money laundering or other offences involving dishonesty, fraud or financial crime
- have been disqualified from acting as a company director
- have been subject to a confiscation order under the Proceeds of Crime Act 2002
- have 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
- have been disciplined or expelled by another supervisor or professional body for regulatory or professional failings
If the person who fails the test is the nominated officer you can:
- appoint someone else who already has fit and proper status
- choose a new person to apply for the test
Approval is a separate process from the fit and proper test. Before certain individuals can own or hold positions of authority in a business within the sectors of:
- accountancy service provider
- estate agency business
- high value dealer
they need approval by HMRC. The approval process is carried out during the application process.
Published: 25 February 2014
Updated: 26 June 2017
- This guidance has been updated to reflect legislation changes effective from 26 June 2017. Information about the new approval process has been added.
- Money Laundering Regulations new fee structure and charges from 1 April 2015.
- First published.