ECSH47520 - Refusing an application

Authority for HMRC to refuse applications for registration for supervision is contained within regulations 58 and 59 of The Money Laundering, Terrorist Financing and Transfer of Funds (Information on the Payer) Regulations 2017 (MLR 2017).  

There is an important distinction between regulation 58 MLR 2017 and regulation 59 MLR 2017. Regulation 58 MLR 2017 sets out the circumstances where HMRC is under a duty to refuse applications, whereas regulation 59 MLR 2017 gives HMRC the power to decide whether to refuse an application for registration in other circumstances. 

Regulation 58 – Duty to refuse 

Regulation 58 MLR 2017states that HMRC must refuse applications for registration for Money Service Businesses (MSBs) and Trust or Company Service Providers (TCSPs), where HMRC is satisfied that the business, or beneficial owner, officer or manager (BOOM) of the business is not a fit and proper person to carry on that business. 

Further detailed guidance on F&P determinations is available in pages ECSH47530 

One of the reasons why a business or BOOM must be determined not fit and proper is if they have an unspent criminal offence listed in Schedule 3 MLR 2017 (or an equivalent offence in another country). Further guidance on convictions under Schedule 3 MLR 2017 is available in ECSH45025. 

 

Regulation 59 – Discretion to refuse 

Regulation 59 MLR 2017 sets out the grounds when HMRC may refuse an application. These are as follows: 

  • If any requirement of, or imposed under, regulation 57 MLR 2017 has not been complied with. 

  • It appears to HMRC that any information provided under regulation 57 MLR 2017 is false or misleading (see ECSH47125). 

  • The business has failed to pay a penalty under Part 9 MLR 2017. 

  • The business has failed to pay a charge imposed by HMRC by under Part 11 MLR 2017. 

  • The business has failed to pay a penalty or charge imposed by HMRC under regulation 35(1) or 42(1) of the Money Laundering Regulations 2007. 

  • HMRC suspects, on reasonable grounds, that the business will fail to comply with any of its obligations under the MLR 2017, Part 3 of the Terrorism Act 2000, Parts 7 and 8 of the Proceeds of Crime Act 2002 the “relevant obligations”); or, 

  • HMRC suspects, on reasonable grounds that any person whom the applicant has identified as one of its officers or managers will fail to comply with any of the relevant obligations. 

  • Where the registering authority is not the applicant's supervisory authority, the supervisory authority opposes the application for registration on reasonable grounds. 

If a business meets any of the above criteria, its application may be refused. The decision-maker should carefully consider and articulate the reasons why the application is being refused in their decision notice (see below), including refusal is appropriate and proportional in the circumstances. 

 

The difference between refusal and rejection 

There is a key difference between the refusal and rejection of applications: we only reject applications when the applicant has not paid its application fees, or where the application is incomplete. 

This is because we do not assess any part of the application when rejecting incomplete applications, including those where fees have not been paid, therefore we do not consider grounds for refusal.  

In other circumstances, for instance, if a business does not have a written risk assessment and/or policies, controls and procedures, the application is deemed incomplete and is therefore rejected.  

In contrast, a refusal occurs when a complete application has been assessed and found not to meet the necessary requirements. 

This distinction is important, as refusal gives a business a right of review and appeal whereas a rejection does not. 

For more information on the rejection of applications see ECSH47525. 

 

Notification of refusal 

Regulation 59(2) MLR 2017 states that where HMRC are the registering authority for a business, we must give the business notice of our decision within 45 days (beginning with either the date on which the application for registration is received, or the date on which any further information required under regulation 57(3) MLR 2017 is received). 

The notice must contain either: 

  • The decision to register the business. 

  • The decision not to register the business. 

If we decide to refuse the application for registration, the notice must also contain: 

  • The reasons for our decision. 

  • The right to a review under regulation 94 MLR 2017. 

  • The right to appeal the decision under regulation 99 MLR 2017. 

For more information on the refusal notice see the operational guidance ECSH47532. 

For more information on the right of review and appeal see ECSH92500 and ECSH93000.


External guidance for businesses 

Our guidance on GOV.UK provides the following guidance:  

“We’ll send you an email when a decision has been made.  

You can sign in at any time to check the status of an application and to see if your application has been approved or refused.  

You can appeal the decision if you disagree with the outcome.”  

It does not provide the full list of reasons as to why we can refuse an application.