SolvedECSH42000 | Dual supervision
From HM Revenue & Customs · Economic Crime Supervision Handbook
Dual supervision
Regulation 7(2) of The Money Laundering, Terrorist Financing and Transfer of Funds (Information on the Payer) Regulations 2017 (MLR 2017), sets out that where there is more than one supervisory authority for a business, the supervisors may agree that one of them will act as the supervisory authority for that business.
In the absence of an agreement, dual supervision is required and supervisory authorities must co-operate in their supervision of the business.
Where an agreement under regulation 7(2) MLR 2017 has been made, the supervisor must notify the business of the agreement or publish the agreement in such a manner as it considers appropriate.
Dual supervision in practice
As of September 2024, HMRC has agreements for sole supervision under regulation 7(2), with the Financial Conduct Authority (FCA) and with the Gambling Commission, in the case of money service businesses (MSBs) who operate in casinos.
MSBs that are required to register with HMRC and carry out money transmission will also need to be registered or authorised with the FCA under the Payment Services Regulations 2009.
Registration and authorisation are two different things – registration relates to anti-money laundering (AML) supervision, whilst authorisation relates to approval from the FCA to conduct certain financial activities. A relevant business must be registered with HMRC for AML supervision unless it is supervised by another UK AML supervisor – see ECSH41000 for more information.
Some MSBs will be dual supervised by HMRC and the FCA, whereas others will be AML supervised solely by HMRC and authorised by the FCA.
Other businesses may be regulated by the FCA for another purpose, for example, because they provide consumer finance or hire purchase services.
In this situation, HMRC and the FCA will decide if a single supervisor can oversee the AML arrangements.
High value dealers and safety deposit boxes
The FCA is the default supervisor for businesses who offer safe custody services - safety deposit boxes or other secure storage suitable for high-value physical items like jewellery, precious metals or documents of title. Some of these businesses are also high value dealers (HVDs) or MSBs that are supervised by HMRC. Depending on the business, they might be supervised solely by the FCA, dual supervised or supervised solely by HMRC.
Law Society of Scotland and solicitor property centres
Solicitor property centres are businesses in Scotland that combine conveyancing and estate agent services in one business. These businesses are supervised by the Law Society of Scotland.
This is due to an exemption within Section 1(2)(a) of the Estate Agency Act 1979, which is where the definition of an estate agent business comes from (regulation 13(2) MLR 2017):
“This Act does not apply to things done—
(a) in the course of his profession by a practicing solicitor or a person employed by him or by an incorporated practice (within the meaning of the Solicitors (Scotland) Act 1980) or a person employed by it;”
This only applies to solicitor property centres in Scotland, it does not apply to estate agency businesses that are not solicitors property centres.
The Law Society of Scotland guidance contains further information.
Co-operation and co-ordination with the FCA
When dealing with MSBs, especially refusal, suspension and/or cancellation of registration it is vital to follow the process set out in the separate guidance below:
(This content has been withheld because of exemptions in the Freedom of Information Act 2000)