The Money Laundering, Terrorist Financing and Transfer of Funds (Information on the Payer) Regulations 2017

[F1 Modifications: Control over registered cryptoasset exchange providers and registered custodian wallet providers U.K.

1.   With respect to an acquisition of or an increase in control over a cryptoasset business, Part 12 of FSMA (control over authorised persons)F2 applies with the following modifications—

(a) references to a “UK authorised person” are to be read as references to a registered cryptoasset exchange provider or registered custodian wallet provider to which Part 12 of FSMA does not otherwise apply;

(b) references to “appropriate regulator” and “each regulator” are to be read as references to the FCA;

(c) section 178 (obligation to notify the appropriate regulator: acquisitions of control)F3 is to be read as if—

(i) subsection (2ZA) were omitted;

(ii) subsection (2A) were omitted;

(d) section 181 (acquiring control)F4 is to be read as if—

(i) for the heading there were substituted “Acquiring or increasing control”;

(ii) for subsections (1) and (2) there were substituted—

“For the purposes of this Part, a person (“A”) acquires or increases control over a UK authorised person (“B”) or a parent undertaking of B (“P”) if A would become a beneficial owner of B or P within the meaning of regulations 5 or 6 of the Money Laundering, Terrorist Financing and Transfer of Funds (Information on the Payer) Regulations 2017 if the acquisition were to proceed.”;

(e) section 182 (increasing control)F5 and section 183 (reducing or ceasing to have control) are to be disregarded;

(f) section 184 (disregarded holdings)F6 is to be read as if—

(i) in subsection (1), for “For the purposes of sections 181 to 183” there were substituted “For the purposes of section 181”;

(ii) subsections (4) to (10) were omitted;

(g) section 185 (assessment: general)F7 is to be read as if—

(i) in subsection (2)(a), “and the financial soundness of the acquisition” were omitted;

(ii) in subsection (3)(a), for “matters” there were substituted “matter”;

(h) section 186 (assessment criteria)F8 is to be read as if it said—

“Assessment criteria

186.   The matter specified in section 185(3)(a) is whether the section 178 notice-giver is a fit and proper person within the meaning of regulation 58AF9 of the Money Laundering, Terrorist Financing and Transfer of Funds (Information on the Payer) Regulations 2017 (fit and proper test: cryptoasset businesses).”;

(i) section 187 (approval with conditions)F10 is to be read as if subsection (2)(b) were omitted;

(j) section 187A (assessment: consultation by PRA with FCA)F11 is to be disregarded;

(k) section 187B (assessment: consultation by FCA with PRA)F12 is to be disregarded;

(l) section 187C (variation etc of conditions)F13 is to be disregarded;

(m) section 189 (assessment: procedure)F14 is to be read as if—

(i) subsections (1A), (1ZB) and (1B) were omitted;

(ii) in subsection (6), “Unless section 190A applies” were omitted;

(n) section 190 (requests for further information)F15 is to be read as if subsections (1A) and (4)(b) were omitted;

(o) section 190A (assessment and resolution)F16 is to be disregarded;

(p) section 191A (objection by the appropriate regulator)F17 is to be read as if—

(i) in subsection (2)(c), for “matters in” there were substituted “matter specified in”;

(ii) subsection (4A) were omitted;

(iii) after subsection (7) there were inserted—

“(8) A person (“A”) acquires or increases control for the purposes of this section if it acquires or increases control over a UK authorised person (“B”) or a parent undertaking of B (“P”) by becoming a beneficial owner of B or P within the meaning of regulations 5 or 6 of the Money Laundering, Terrorist Financing and Transfer of Funds (Information on the Payer) Regulations 2017F18 .”;

(q) section 191B (restriction notices)F19 is to be read as if—

(i) in subsection (2)(a), after “voting power” there were inserted “or otherwise being a beneficial owner (within the meaning of regulations 5 or 6 of the Money Laundering, Terrorist Financing and Transfer of Funds (Information on the Payer) Regulations 2017) of the UK authorised person (“B”) or a parent undertaking of B”;

(ii) in subsection (2)(b), “in relation to the shares or voting power,” were omitted;

(iii) subsection (2A) were omitted;

(iv) after subsection (3) there were inserted—

“(3ZA) In a restriction notice, the appropriate regulator may direct that, in respect of a beneficial owner of a UK authorised person (“B”) or a parent undertaking of B, until further notice, no influence over the management or activities of B is to be exercisable by the beneficial owner.”;

(v) subsection (3A) were omitted;

(vi) in subsection (6)(b), after “held in” there were inserted “, or beneficial ownership of,”;

(r) section 191C (orders for sale of shares)F20 is to be read as if subsections (2A), (7) and (8) were omitted;

(s) section 191D (obligation to notify the appropriate regulator: dispositions of control)F21 is to be read as if—

(i) subsection (1A) were omitted;

(ii) after subsection (2) there were inserted—

“(3) For the purposes of this section, a person (“A”) reduces or ceases to have control over a UK authorised person (“B”) or a parent undertaking of B (“P”) if A would cease to be a beneficial owner of B or P within the meaning of regulations 5 or 6 of the Money Laundering, Terrorist Financing and Transfer of Funds (Information on the Payer) Regulations 2017 if the disposition were to proceed.”;

(t) section 191F (offences under this Part)F22 is to be read as if—

(i) in subsection (2), “or section 190A applies” were omitted;

(ii) subsection (4A) were omitted;

(iii) for subsections (8) and (9) there were substituted—

“(8) A person guilty of an offence under subsection (1) to (3) or (5) to (7) is liable—

(a) on summary conviction—

(i) in England and Wales, to a fine;

(ii) in Scotland or Northern Ireland, to a fine not exceeding the statutory maximum;

(b) on conviction on indictment, to a fine.

(9) A person guilty of an offence under subsection (4) is liable—

(a) on summary conviction—

(i) in England and Wales, to a fine;

(ii) in Scotland or Northern Ireland, to a fine not exceeding the statutory maximum;

(b) on conviction on indictment, to imprisonment for a term not exceeding two years or a fine, or both.”;

(iv) after subsection (9) there were inserted—

“(10) A person is not guilty of an offence under this section if that person took all reasonable steps and exercised all due diligence to avoid committing the offence.”;

(u) section 191G (interpretation)F23 is to be read as if the definitions of “the appropriate regulator”, “qualifying credit institution” and “UK authorised person” were omitted.]

Textual Amendments

F1 Sch. 6B inserted (11.8.2022) by The Money Laundering and Terrorist Financing (Amendment) (No. 2) Regulations 2022 (S.I. 2022/860), regs. 1(2)(c), 12(4)

F2 2000 c. 8.

F3 Subsection (2ZA) was added by S.I. 2018/135; subsection (2A) was added by section 26(1) and (3) of the Financial Services Act 2012 (c. 21).

F4 Section 181 was substituted by S.I. 2009/534.

F5 Section 182 was substituted by S.I. 2009/534.

F6 Section 184 was substituted by S.I. 2009/534 and amended by S.I. 2013/3115, 2015/1755 and 2019/534.

F7 Section 185 was substituted by S.I. 2009/534 and amended by section 26(1) and (2) of the Financial Services Act 2012 (c. 21).

F8 Section 186 was substituted by S.I. 2009/534 and amended by S.I. 2013/3115.

F9 Regulation 58A was inserted by S.I. 2019/1511.

F10 Section 187 was substituted by S.I. 2009/534; subsection (2) was substituted by section 26(1) and (5) of the Financial Services Act 2012.

F11 There have been amendments to section 187A but none are relevant.

F12 There have been amendments to section 187B but none are relevant.

F13 There have been amendments to section 187C but none are relevant.

F14 Section 189 was substituted by S.I. 2009/534 and amended by s.26(1) and (2) of the Financial Services Act 2012. There are other amendments but none are relevant.

F15 There have been amendments to section 190 but none are relevant.

F16 There have been amendments to section 190A but none are relevant.

F17 Section 191A was substituted by S.I. 2009/534; subsection (2) was amended by section 26(1) and (2) of the Financial Services Act 2012; subsection (4A) was substituted by section 26(1) and (7) of that Act. There have been other amendments but none are relevant.

F18 S.I. 2017/692.

F19 Section 191B was substituted by S.I. 2009/534; subsection (2) was amended by section 26(1) and (2) of the Financial Services Act 2012; subsection (2A) was added by section 26(1) and (8) of that Act. There have been other amendments but none are relevant.

F20 Section 191B was substituted by S.I. 2009/534; subsection (2A) was added by section 26(1) and (9) of the Financial Services Act 2012; subsection (2A) was added by section 26(1) and (8) of that Act; Subsections (7) and (8) were added by S.I. 2016/1239. There have been other amendments but none are relevant.

F21 Section 191D was substituted by S.I. 2009/534. Subsection (1A) was added by section 26(1) and (10) of the Financial Services Act 2012. There have been other amendments but none are relevant.

F22 There have been amendments to section 191F but none are relevant.

F23 Section 191G was substituted by S.I. 2009/534 and amended by section 26(1) and (12) of the Financial Services Act 2012 and S.I. 2019/632.