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HMRC internal manual

Money Laundering Regulations: Compliance

Legislation: MSBs carrying out Annexe 1 Financial Activities

Under the Regulations HMRC is responsible for the supervision of any Annex 1 financial activities when they are carried out by an MSB required to register with HMRC.

The Regulations refer to certain businesses as ‘Annex 1 financial institutions’. This is because the definition of ‘financial institution’ in regulation 55 and 10(2)(a) refers to an undertaking, other than a credit institution (and the other bodies listed in 10(3)), which carries out one or more of the listed activities in points 2 to 12 and 14 and 15 of Annex 1 to the Capital Requirements Directive as listed in Schedule 2 of the Regulations.

All Annex 1 financial institutions are required to comply with anti-money laundering legislation by putting in place risk sensitive anti-money laundering policies and procedures to prevent their businesses from being used by money launderers and terrorists. They must also report suspicious activity to the National Crime Agency (NCA).

Some Annex 1 financial activities are carried out by businesses authorised by FCA and therefore supervised by FCA. In these situations any MSB activities will also be supervised by FCA.

As a supervisor HMRC is required to effectively monitor the Annex 1 financial activities taking place within MSBs along with the MSB activities.