ECSH41535 - Instances where the Financial Conduct Authority will become sole supervisor of a money service business
Money service businesses (MSBs) that provide money transmission services (also known as money remittance which is considered a payment service under the Payment Services Regulations (PSR) 2017) have to be registered with HMRC in accordance with The Money Laundering, Terrorist Financing and Transfer of Funds (Information on the Payer) Regulations 2017 for supervision, and also the Financial Conduct Authority (FCA) under the Payment Service Regulations 2017 (for permissions to provide a payment service). If the MSB provides additional services regulated by the FCA, the FCA should accept sole supervision of the business. Examples of services regulated by the FCA include;
Provision of Electronic Money (E-Money) – therefore are an E-money institution, or Small E-money Institution
Provision of Authorised Activities under Financial Services and Markets Act (FSMA) for example those listed below – therefore an Authorised Person;
consumer credit
benchmark-related activities
investment businesses
e-money
funeral plans
insurance
dormant account funds
home finance
The FCA also authorises a number of other activities, you can read about authorised activities here:"
When you identify that an MSB provides money transmission services, you should search the FCA’s financial services register to confirm its registration status.
If the business has an existing FCA registration, you should check its “firm status”, to establish the type of registration that the business holds with the FCA, as well as its “payment services/electronic money status”. Where the business “Firm Status” is showing as EMD/EMI or Authorised Electronic Money Institution or Small Electronic Money Institution these are supervised by the FCA. HMRC is not the supervisor for EMI’s, therefore as long as they don’t conduct any other activities falling within HMRC-supervised sectors, you should advise the business to de-register with HMRC, or for new applicants withdraw their application. Additionally, you should notify the FCA, via the FCA Liaison, as they will accept sole supervision of the MSB. When a business does conduct additional activities falling within HMRC-supervised sectors you should follow the guidance around dual supervision in ECSH42000.
Where the business “Firm Status” is showing as an Authorised Payment Institution (API) or registered small payment institution (SPI), to identify which payment services the business offers, scroll down on the FCA website and review the “activities and services” section, where you will see “payment services”. Once you expand this it will advise which type of services the business is registered to provide, such as “Money Remittance”. The “Activities and Services” section of the FCA website will also show whether the business is able to provide any other services such as
Banking,
Insurance,
Mortgages and Home finance,
Consumer Credit,
Pensions,
Investments
Other Services (where the dropdown will open up to describe the other services provided).
If the “Activities and Services” section of the FCA website contains anything in addition to “Payment Services” the FCA is the supervisor for the purposes of the Transfer of Funds Regulations and HMRC are not the business supervisor for these purposes. More information on the FCAs supervision of Payment Services and Electronic money can be found in the FCAs “Payment Services and Electronic money - Our Approach” publication. More information on the other activities the FCA regulate can be found on their authorisations pages.
Where the business’ “Activities and Services” is showing anything in addition to that of “payment services” these are supervised by the FCA, the FCA should be the sole supervisor, you should therefore email the FCA Liaison who will escalate the query to the FCA. If the FCA provide confirmation that it will assume sole supervision of the MSB, the business should be asked to de-register or withdraw its application for anti-money laundering supervision with HMRC.