ECSH64020 - Regulation 60 - Cancellation and suspension of registration in a register under regulation 54 and 55

Category Heading	Description
The Law	https://www.legislation.gov.uk/uksi/2017/692/regulation/60
What it means	This regulation gives HMRC the power to suspend (for any amount of time that it considers appropriate) or cancel a registration and details the reasons we would suspend or cancel a registration.
Purpose	It allows HMRC to remove businesses (either temporarily or permanently) from our supervised register.
Time Line	Cancellation is covered in regulation 30 and 34 of MLR2007. Suspension was not previously an available option.
What to establish	60(1)(with regards to 60(2))- Are any of the following considered to not be fit and proper?: MSBs and TCSPs – The businesses/applicant themselves, including individuals who are running the business either on their own (sole trade) or in a partnership All BOOMs of an MSB or TCSP – Including beneficial owners, individuals who are effectively directing or managing the business, nominated officer (sometimes referred to as a Money Laundering Reporting Officer (MLRO)) and senior managers who are engaged directly in the provision of regulated activity Agents of an MSB and the BOOMs of these agents See Regulation 58 for the Fit and Proper Test 60(3)(a)- Do any components of Regulation 59(1) (a) - (e) apply? For example, have any requirement of Reg 57 not been complied with or is any information provided under Reg 57 false or misleading? Has there been a failure to pay penalties or fees? Or are there reasonable grounds to suspect that the applicant/ business will fail to comply with its obligations under MLR2017 or other relevant legislation outlined? See Reg 59 for full details. If any factors do apply, then HMRC may cancel or suspend the registration. 60(3)(b)- Has the business failed to provide information or documents required in a Notice given under Regulation 66 (or failed to comply with any other requirements of a Notice given under Regulation 66)? HMRC may suspend or cancel a registration under 60(3)(b) if the business has failed to comply with the requirements of a Notice given under Regulation 66. 60(4)- If the business was registered with HMRC under MLR2007 (prior to ETMP online applications in 2017 under MLR2017), did it provide all the additional information required under reg 57 of the 2017 MLRs within the 12 months that they came into force (i.e. 26 June 2018)? If a business failed to provide the additional information by said date, HMRC may suspend or cancel a registration by way of Notice under 60(4). If a business, which was registered under MLR2007, failed to provide the additional information required under MLR2017 (or “renew” its registration) by 26 June 2018, it would technically remain registered unless we issue an official notice of cancellation. 60(5)- If the business is an MSB carrying out money transmission services, are they registered with the FCA? MSB’s carrying out money transmission must be registered with both the FCA and HMRC- See Regulation 10. 60(6)- This regulation does not apply as HMRC does keep a register of businesses under reg 54 and 55. 60(7)- When HMRC suspends or cancels a business's registration, we must detail in our decision notice: (a) what the decision is and the date the cancellation or suspension takes place (b) how long the suspension will last (if appropriate) (c) grounds under the regulations for which the decision is based and evidence to support this (d) the right to a review by HMRC’s Appeals and Review Team –See Reg 94, and (e) the right to appeal to an independent tribunal - See Reg 99. IMPORTANT- Failure to include these details will make the notice legally flawed and not valid. 60(8) and (9) do not apply to HMRC as these relate to the FCA. 60(10)- When a decision has been made to either cancel or suspend a registration, consideration must be given to whether or not it is in the public interest (where the needs of the public outweigh the needs of the business/individual) for the cancellation or suspension to be given with immediate effect. When considering the public interest, factors to consider are: higher risk businesses whereby them continuing to trade, there could be a significant risk of money laundering or terrorist financing there has been severe non-compliance that must be stopped immediately nature of business and the risk profile If there is public interest for the cancellation or suspension to be given with immediate effect, the Notice should state so in accordance with 60(10) and detail why it is being given with immediate effect. It should also state it is effective from the date of the Notice. If there is no public interest for the cancellation or suspension to be given with immediate effect, the Notice should detail the date that the sanction will take effect from; as per 60(7)(a). There is no provision within the regulations to state what notice period should be given however, normally this would be 30 days from the date of the Notice but can be changed depending on the circumstances of the case. 60(11) and (12)- When a registration is cancelled or suspended, consideration must be given to whether it is appropriate and proportionate for the decision to be published on gov.uk. Any Notice of cancellation or suspension should advise that HMRC may publish the details of the decision and that the business has 14 days to make representations against the publication. The business should then be sent a further letter once the decision has been made to publish the details of the sanction. If a decision is under review, this does not affect the publication of the decision. If a decision has been appealed to tribunal, this must (without delay) be noted alongside the publication on gov.uk with the status of the appeal in accordance with 60(12). See publication guidance under further reading.
Scenario:	F&P Failure - Cancellation Following intelligence from the MET Police detailing an MSB on our register was subject to a cash seizure and the sole director was arrested for money laundering offences, the case was packaged and passed to authorisations teams to review. The caseworker conducted a review of the business and RP and was satisfied that there was a significant risk of the business being used for MLTF and determined that both the business and its director were not fit and proper. As such the decision was made to cancel the business’ registration under regulation 60(1) (with regards to regulation 60(2)) as the business and its sole director was not fit and proper. Due to the significant risk of MLTF, it was in the public interest for this cancellation to be effective immediately. Therefore, the officer applied regulation 60(10) to cancel the registration effective from the date of the Notice. Suspecting non-compliance - Suspension Compliance visit was concluded in September 2021. Outcome was business did not have a risk assessment (RA) in place. Warning letter was issued giving the business 3 months to put one in place and comply with its obligations under Regulation 18. Follow up compliance visit was started in September 2022. Business had not met its obligations under Regulation 18 and to address ongoing risk of business continuing to undertake relevant activity without appropriate risk assessment in place. To mitigate this ongoing risk, the officer considered that the registration should be suspended for a period of 3 months to stop relevant activity until the business can satisfy HMRC it has complied with the regulations and put appropriate RA in place.
How to test compliance and evidence to obtain	Where a business’s registration is suspended, it is temporarily removed from the register. No business or individual can carry out relevant activity while unregistered. There may some circumstances where we need to refer the case to check that the business has stopped trading during the period of suspension. There should always be an exit strategy for suspension where HMRC can be satisfied that the grounds for suspension are addressed or not to either lift the suspension or take further action.
Best Practice	Is a criminal referral appropriate? If so, this must be completed before taking any civil action. There should be checks carried out to check for any unspent schedule 3 convictions prior to imposing any sanctions or referring to Governance Panel (this is usually done by completing an R83 form). Always ensure the sanction you intend to impose on a business is the correct one for the case. You need to look at the breaches and decide what sanction (or combination of sanctions) will have the most impact and have the desired effect. For example, have any of the BOOMs been knowingly involved in any breaches of the regulations and if so, should a prohibition on management be considered- See Reg 78. When suspending a business’s registration, you must consider what period is appropriate in line with your case. This should take into account how long it may reasonably take for the grounds of the suspension to be addressed. See suspensions guidance. Any cancellation or suspension decision must be submitted to the Governance Panel to review. The Governance Panel is held every two weeks (usually a Wednesday) and case papers should be submitted no later than 1 week prior (unless the registration is already suspended then any final papers should be submitted 1 month prior to the suspension expiring). - See GP Terms of reference. If suspending a business’s registration for a certain period, always keep the end date in mind and have a plan of the outcome or 'exit strategy’. Make sure any final case papers are submitted to Governance Panel 1 month before the suspension expiring. (I.e. if a suspension is due to end soon, you cannot leave it until the week before the end date to prepare your next steps of the case whether that be a further suspension, cancellation etc). You cannot extend a suspension that is already in place- if you believe the grounds of the suspension have not been satisfactorily addressed, you will need to impose a further suspension and issue another Notice of Suspension. Any suspensions and cancellations should be added onto the ECS Watchlist and PDNC Grid for publication (if agreed publication is appropriate). (This content has been withheld because of exemptions in the Freedom of Information Act 2000) Are there any follow-up action needed such as cross-tax referrals etc.
AMP	No further best practice.
ASP	If an ASP is suspended/cancelled we should contact the Agent Compliance Team, so that they can note their records and take any action they deem necessary for the wider HMRC. Email - Maintainer, Agent (PT Operations North East England) agent.maintainer@hmrc.gov.uk. The information they need is Name, Address, ETMP Reference.
EAB	No further best practice.
LAB	No further best practice.
HVD	An HVD can continue to trade in goods whilst its registration is suspended; it is only the relevant activity (i.e. payments in cash of 10,000 euros or more) which is prohibited. If there are any other User Interests you should inform them that the business is no longer registered to make or receive relevant cash payments. Any evidence which suggests that the business is still handling relevant cash payments should be referred to ECS to consider further action. For cash seizures, follow best practice for MSBs below.
MSB	If the MSB you have cancelled/suspended has any agents, you will have to notify the business as a principal that it is their responsibility to inform their agents of their registration being cancelled/suspended. If an MSB is registered with us as an independent MSB but are also acting as an agent for a principal and you have cancelled/suspended their registration, you will have to write to its principal to inform them that their agent has had its registration cancelled/suspended. If HMRC is satisfied that an agent, who is not independently registered with us, is not fit and proper, we should notify the principal of this determination. Failure of the principal to act on this may lead to their registration being cancelled or suspended. If the MSB is a money transmitter, you will have to email the ECS Information Gateway Team (ecsinformationgatewayfis@hmrc.gov.uk ) and request the details of the cancellation or suspension be passed to the relevant team in the FCA. Attach the Notice of cancellation/suspension (and any F&P letters) and business details, including their FCA reference. Cash seizures which are most commonly seen within the MSB sector do not automatically warrant a suspension or cancellation and the circumstances of the case including all disclosable intelligence must be considered.
TCSP	No further best practice.
Further Reading	Fit & Proper - Approvals Guidance
	Deciding on Sanctions - Handout 2.
	Sanctions/ Publishing Details of the Non-Compliance Guidance
	Governance Panel SWI
	Deregistration SWI Edinburgh - 31 01 2019.docx
	Part 3 of the Terrorism Act 2000
	Part 7 of the Proceeds of Crime Act 2002
	Part 8 of the Proceeds of Crime act 2002
	Annex 1 Financial Institutions
	The Payment Service Regulations 2017
	Money Laundering and Terrorist Financing (High-risk Countries) Regulations 5 December 2023
	National Risk Assessment Dec 2020
FAQ's	What is an Annex 1 financial institution? - Annex 1 Financial Institutions If a business has provided information or representations against a suspension, should I then lift the suspension? No, this would not merit and automatic lifting of the suspension and all information must be considered carefully to ensure the risks and grounds of suspension have been addressed. How far back we can consider non-compliance? For example we refused a registration 4 years before they then reapply sometime later and we still see evidence of non -compliance. Can the previous non-compliance refusal still be considered? There are no time limits specified as such. A safe legal approach will be to apply Reg 60 and see if any of the scenarios in Reg 59 apply. In addition you can look also to Reg 57 and see if the business has failed to comply with the requirements in that Regulation. Clearly the fact that they have been refused registration before is relevant and could be taken into account, but you also need to look at what has happened since they have been refused. Has their compliance improved, are they still carrying on with their non-compliance? Is a fact specific question and apply the facts to the Regs and assess if the conditions are met?