The fit and proper test and HMRC approval
Find out who the fit and proper test and approval applies to and how HMRC checks on your business.
When you sign in to the anti-money laundering supervision as an existing customer, you must:
- provide the date of birth for the responsible people within your business
- confirm whether they have passed HMRC’s fit and proper test, or have approval
You will only need to provide this information once.
Responsible people in your organisation will have received a letter from HMRC confirming that they have:
- passed the test
- approval to act as a responsible person
We will use this information to do the fit and proper test on you and relevant responsible people running the business.
Approval checks are done before an individual can hold a position of authority in a business.
The fit and proper test
HMRC carries out the test to make sure you meet the requirements of the money laundering regulations. The test is a series of checks that apply to you and the relevant responsible people running your business. It forms part of the registration process for:
Who the fit and proper test applies to
You must include responsible persons when you apply to register your money service business or trust, or company service.
The fit and proper test also applies to agents of money service businesses and their responsible persons.
The 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 directly engaged in providing the regulated activity
- the nominated officer
- beneficial owners of the business
- the person who is in effect directing the business
- agents of money service businesses and their beneficial owners, officers and senior managers
How HMRC carries out 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 have:
- been convicted of, or are being investigated for, money laundering or other offences involving dishonesty, fraud or financial crime
- been disqualified from acting as a company director
- been subject to a confiscation order under the Proceeds of Crime Act 2002
- 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
- been disciplined or expelled by another supervisor or professional body for regulatory or professional failings
If you cannot prove to HMRC that you’re a responsible person regarding the risk of money laundering or terrorist financing, you’ll fail the test.
If you fail the fit and proper test
If you’re registering for the first time and the nominated office fails this test, your application to register will fail.
If you’re completing your annual supervision registration or adding a nominated officer who fails this test, you can:
- appoint someone else who already has fit and proper status
- choose a new person to apply for the test
Approval
Approval is a separate process from the fit and proper test. Before an individual can hold a position of authority in a business, they need approval by HMRC.
Who approval applies to
HMRC carries out approval checks when these businesses register for money laundering supervision:
- accountancy service providers
- estate agencies
- letting agency businesses
- art market participants
- high value dealers
Approval is similar to the fit and proper process but HMRC makes different checks.
The checks apply to individuals who own or hold positions of authority such as:
- senior managers
- officers
- beneficial owners
- sole practitioners
If you fail approval
You’ll fail approval if you’ve committed an offence under Schedule 3 of the money laundering regulations.
If you’re registering for the first time and fail approval, your application to register will fail. We will not register your business if any of the applicants fail approval.
If you’re updating your registration details or adding a new nominated officer who fails this test, depending on the risk of money laundering or terrorist financing, HMRC will tell you whether you can:
- appoint someone else who already has already been approved
- choose a new person to apply for approval
When the fit and proper test and approval checks take place
HMRC will use the information you supply online when you apply to register for anti-money laundering supervision to carry out the checks.
There’s no need to apply for a test each year. But if a new responsible person joins your business after you’ve registered you should sign in to the online service and add their details.
If you’re not yet registered online, you can use form MLR101 to apply for the fit and proper test.
What checks happen in the fit and proper test and approval
HMRC will check the accuracy of the information you provide online. We will do this by checking those details against information held by:
- HMRC
- other regulatory authorities
- government and law enforcement agencies
We’ll contact you if we need you to send more information or documents to confirm identification.
If you pass the test, HMRC will continue to monitor your fit and proper or approved status.
Further guidance
You can find more information about the checks that HMRC makes in the guidance on the fit and proper test and approval.
Last updated 31 October 2022 + show all updates
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Updated the 'if you fail the fit and proper test' section because 'renewing your registration' has been renamed to 'completing your annual supervision'.
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We've updated the section 'who approval applies to' so that it includes art market participants and letting agency businesses.
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We have updated 'If you fail the fit and proper test' and 'If you fail approval', and have added letting agencies and art market participants to the 'Approval' section.
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The introduction has been updated with more information on what existing customer will be asked to provide when they log in to the anti-money laundering supervision.
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Information has been added to explain what happens if applicants don't pass the HMRC approvals test.
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This guidance has been updated to reflect legislation changes effective from 26 June 2017. Information about the new approval process has been added.
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Money Laundering Regulations new fee structure and charges from 1 April 2015.
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First published.