Money service business registration in the United Kingdom
The United Kingdom splits money services supervision between two authorities, and getting the split wrong is the most common and most expensive mistake in this market. HMRC registers money service businesses for anti-money-laundering supervision. The FCA authorises payment institutions for the conduct of payment services. Currency exchange and cheque cashing sit with HMRC; money remittance almost always requires FCA authorisation, and HMRC registration does not substitute for it.
UK MSB registration at a glance
Registration is an anti-money-laundering measure, not a licence to provide financial services. It carries no capital requirement and no safeguarding obligation, because those sit in the FCA regime instead.
Supervisory authority
HM Revenue & Customs, as the anti-money-laundering supervisor for money service businesses that are not otherwise supervised. The Financial Conduct Authority supervises payment institutions and e-money institutions separately.
Legal basis
Money Laundering, Terrorist Financing and Transfer of Funds (Information on the Payer) Regulations 2017.
- Who registers with HMRC
- Currency exchange offices, cheque cashers, and money transmitters not supervised by the FCAA firm already authorised or registered by the FCA for payment services is supervised by the FCA, not HMRC.
- Registration before trading
- MandatoryCarrying on MSB activity before registration is a criminal offence under the MLR 2017.
- Fees
- Annual registration fee charged per premises, plus a fit and proper test fee per personRates are set by HMRC and revised periodically — confirm the current figures before budgeting.
- Fit and proper test
- Required for MSBsApplies to beneficial owners, officers and managers. HMRC applies this test to MSBs and trust or company service providers specifically.
- Minimum capital
- Not prescribedNo capital, own funds or bonding requirement attaches to HMRC registration.
- Safeguarding of client funds
- Not applicableSafeguarding is an FCA payment services obligation, not an HMRC one.
- Renewal
- AnnualRegistration is renewed yearly and changes in business details must be notified to HMRC.
- Record retention
- 5 yearsCustomer due diligence records and transaction records from the end of the business relationship or transaction.
- Passporting
- NoneThe UK left the EEA passporting regime; UK registration or authorisation gives no EEA market access.
Registering with HMRC does not authorise money remittance. Providing payment services in the UK by way of business generally requires FCA authorisation as a payment institution or registration as a small payment institution, and doing so without it is a criminal offence under the Payment Services Regulations 2017.
Activities HMRC registers
The MLR 2017 defines a money service business by reference to three activities. Where the firm is already FCA-supervised, the FCA is the AML supervisor and no separate HMRC registration applies.
- Currency exchange office — exchanging currency of one country for another, whether at a counter or online.
- Cheque casher — cashing cheques payable to customers.
- Money transmitter — transmitting money or any representation of monetary value by any means, where not FCA-supervised.
- Businesses conducting more than one of these activities register once, covering each activity and each premises.
- Trust or company service providers and certain other sectors register with HMRC under the same regulations, under their own rules.
The money transmitter category is where the HMRC and FCA regimes meet. Most remittance models are regulated payment services, which places them in the FCA regime and outside HMRC MSB registration entirely.
How UK registration works
The order of operations matters: establishing which regulator applies comes before any application, because applying to the wrong one wastes months.
Determine which regime applies
1–3 weeksAssess whether the business provides regulated payment services under the PSRs 2017. If it does, the route is FCA authorisation or registration, and HMRC MSB registration is not the answer. Pure currency exchange or cheque cashing sits with HMRC.
Establish the UK entity and governance
2–4 weeksIncorporate, appoint directors and identify beneficial owners, officers and managers who will be subject to the fit and proper test.
Build the AML compliance framework
4–8 weeksWritten policies, controls and procedures, a firm-wide risk assessment, a nominated officer for suspicious activity reporting, customer due diligence procedures and staff training.
Filing: MLR 2017 policies, controls and procedures
Submit the HMRC registration application
2–4 weeks to prepareRegister through HMRC's online service, listing each premises and each responsible person, and pay the applicable fees.
Filing: HMRC money laundering supervision registration
Pass the fit and proper test
Several weeksHMRC assesses beneficial owners, officers and managers. Undisclosed criminal history or unpaid tax liabilities are common grounds for refusal.
Apply to the FCA where payment services are provided
3–12 monthsWhere the model involves regulated payment services, apply for authorisation as a payment institution or registration as a small payment institution — a substantially heavier process with capital and safeguarding requirements.
Filing: FCA Connect application under the PSRs 2017
Trade, report and renew
OngoingBegin trading only once registered, submit suspicious activity reports to the NCA as required, maintain records for five years, and renew annually.
UK banking access for money service businesses is difficult and has been the subject of repeated public debate. Firms should treat obtaining a banking relationship as a workstream in its own right rather than an administrative step after registration.
What HMRC registration does and does not give you
The boundary between anti-money-laundering supervision and conduct authorisation is the entire point of this page.
Covered by this licence
- Satisfies AML supervision requirements for currency exchange
- Satisfies AML supervision requirements for cheque cashing
- Permits trading once registration is granted, for those activities
Not covered — separate licence required
- Authorises regulated payment services such as money remittanceFCA authorisation or registration under the PSRs 2017 is required
- Permits issuing electronic moneyFCA e-money institution authorisation required
- Provides EEA passportingNo UK authorisation has passported into the EEA since the end of the transition period
- Imposes safeguarding of client fundsSafeguarding is an FCA payment services requirement
- Constitutes an FCA licence or approvalHMRC registration must never be presented to customers as FCA regulation
Ongoing obligations under the MLR 2017
HMRC conducts compliance visits and publishes penalties for breaches, most commonly for inadequate risk assessments and customer due diligence failures.
Documented firm-wide risk assessment covering customers, countries, products, services, transactions and delivery channels, kept up to date.
Written and proportionate to the size and nature of the business, approved by senior management and reviewed regularly.
Identify and verify customers and beneficial owners, apply enhanced due diligence to high-risk relationships and politically exposed persons, and conduct ongoing monitoring.
Appoint a nominated officer and report suspicious activity to the National Crime Agency, seeking a defence against money laundering where required.
Ensure payer and payee information accompanies transfers of funds as required by the transfer of funds provisions in the MLR 2017.
Train relevant staff on money laundering and terrorist financing risks and on the firm's procedures, with records maintained.
Retain records for five years, notify HMRC of changes in business details or responsible persons, and renew registration annually.
The HMRC and FCA boundary
This is where UK money services projects most often go wrong. The two regimes are not alternatives to be chosen between — the business model determines which applies, and in some cases both do at different points in the group.
- HMRC supervises for anti-money-laundering purposes. It does not authorise the provision of financial services or supervise conduct.
- Money remittance is a regulated payment service. Providing it by way of business without FCA authorisation or registration is a criminal offence under the PSRs 2017.
- A firm already authorised or registered by the FCA is supervised by the FCA for AML purposes and does not separately register with HMRC as an MSB.
- HMRC registration carries no capital requirement and no safeguarding of customer funds, so it offers customers none of the protections an FCA-authorised payment institution provides.
- Neither regime provides EEA market access. Serving EEA customers requires an authorisation in an EEA member state.
- Describing HMRC registration as being 'FCA regulated' or 'UK licensed' in marketing has drawn regulatory attention and should be avoided entirely.
When the HMRC route is the right one
HMRC registration fits a narrower set of businesses than most applicants assume, precisely because remittance falls outside it.
Best for
- Currency exchange businesses, whether bureau de change premises or online-only foreign exchange for consumers.
- Cheque cashing operators.
- Businesses whose UK activity is genuinely limited to exchange or cheque cashing without any payment service element.
- Groups mapping their UK obligations who need to establish which supervisor applies before committing to an application.
Not for
- Remittance and money transfer businesses, which need FCA authorisation or registration instead.
- Wallet and e-money products, which require FCA e-money institution authorisation.
- Businesses seeking EEA market access, which no UK authorisation provides.
- Firms looking for a prudentially regulated status to present to partners and customers — HMRC registration is not that.
Related routes
Remittance and payment services with EEA market access through PSD2 passporting.
A UK authorisation does not passport into the EEA, and vice versa.
Businesses issuing e-money or holding customer balances as stored value across the EEA.
A single federal registration covering a national market, including a foreign MSB category for non-resident businesses.
Businesses with US customers.
State money transmitter licensing applies on top of the federal filing.
UK MSB registration — frequently asked questions
It depends on the activity, not on preference. Currency exchange and cheque cashing are supervised by HMRC through MSB registration. Money remittance and other regulated payment services require FCA authorisation as a payment institution or registration as a small payment institution. A firm already authorised or registered by the FCA is supervised by the FCA for anti-money-laundering purposes and does not also register with HMRC as an MSB.
No. Carrying on money service business activity before registration is granted is a criminal offence under the Money Laundering Regulations 2017. HMRC has taken enforcement action against businesses that traded while an application was pending.
HMRC charges an annual registration fee per premises and a separate fit and proper test fee for each person assessed. Rates are set by HMRC and revised periodically, so current figures should be confirmed directly before budgeting. The larger costs are the compliance framework and, where the FCA regime also applies, the authorisation process itself.
HMRC applies a fit and proper test to beneficial owners, officers and managers of money service businesses and trust or company service providers. It considers criminal history, compliance record and tax affairs. Failing the test blocks registration, and undisclosed matters found during assessment are treated more seriously than matters disclosed upfront.
No. UK firms lost EEA passporting rights at the end of the transition period. Serving customers in the EEA requires authorisation from a regulator in an EEA member state — commonly a payment institution or e-money institution licence in an EU jurisdiction.
No. HMRC registration is anti-money-laundering supervision only. It imposes no capital requirement and no safeguarding obligation. Safeguarding of customer funds arises under the FCA payment services regime, which is one of the practical reasons remittance sits with the FCA rather than HMRC.
UK money service business obligations arise under the Money Laundering Regulations 2017, and payment services are regulated separately under the Payment Services Regulations 2017. Fees and requirements are revised periodically. Confirm the current position with HMRC, the FCA and UK counsel.