Money Services Business Registration in the UK: HMRC, the FCA and What Applies

What Is a Money Services Business?

A money services business (MSB) is a firm that provides one or more of the following services: currency exchange (bureau de change), money transmission (sending or receiving money on behalf of customers), or cheque cashing. In the UK, MSBs are regulated under the Money Laundering, Terrorist Financing and Transfer of Funds (Information on the Payer) Regulations 2017 (MLR 2017). The direct answer: most MSBs register with HMRC for anti-money laundering supervision. Firms already supervised by the FCA do not register with HMRC as well. A money transmitter also needs FCA permission under the Payment Services Regulations 2017, either as an authorised payment institution or as a small payment institution.

MSBs sit at the intersection of high-volume cash handling and cross-border remittance: two activity types the FCA and HM Treasury consider inherently higher risk for money laundering and terrorist financing. This guide explains the registration process, common pitfalls and ongoing obligations every MSB operator must understand.

Who Needs to Register?

Any person or entity carrying on MSB activities by way of business in the United Kingdom must be registered for anti-money laundering supervision before commencing operations. HMRC states that a business that applied after 10 January 2020 must not operate until HMRC confirms its registration. This applies to:

• Bureau de change operators, including high-street shops, airport kiosks and online FX platforms that physically exchange banknotes
• Money transmission businesses: firms that accept cash (or equivalent) from a sender and arrange for a corresponding amount to be paid to a recipient, typically cross-border
• Cheque cashers: businesses that encash cheques for customers in exchange for a fee

Money transmission is also a payment service under the Payment Services Regulations 2017, so money transmitters need FCA payment services permission as well as AML registration. Occasional currency exchange or cheque cashing below HMRC's turnover limits can be exempt.

US readers should note that "MSB" means something different in the United States, where firms register with FinCEN; see our US MSB registration guide.

The Registration Process

Step 1: Business-wide risk assessment. Before applying, you must complete a written risk assessment identifying the money-laundering and terrorist-financing risks your business faces. This must consider customer types, geographic exposure, product channels, delivery mechanisms and transaction patterns. The FCA expects this to be a living document, not a one-off compliance exercise.

Step 2: AML/CFT policies and procedures. You must draft and implement policies covering customer due diligence (CDD), enhanced due diligence (EDD) for higher-risk relationships, ongoing monitoring, suspicious activity reporting (SARs), record-keeping and staff training. These policies must be proportionate to the risks identified in your business-wide risk assessment.

Step 3: Fit-and-proper assessments. HMRC (or the FCA, for FCA-supervised firms) will assess every beneficial owner, officer and manager (BOOM) of the applicant firm. Each individual must demonstrate honesty, integrity, competence and financial soundness. Criminal records checks, credit checks and CV verification are standard. Any individual with unspent convictions for financial crime will almost certainly cause the application to fail.

Step 4: Application submission. HMRC registration is made online through HMRC's money laundering supervision service, with the fee for each premises and for each fit and proper test paid at the same time. Payment services applications to the FCA are made through Connect. Have the business-wide risk assessment, AML policies, BOOM details, organisational charts and business plan ready before you apply.

Step 5: Assessment and determination. The supervisor reviews the application against its registration criteria. It may request additional information, conduct visits or interview key personnel. It will refuse registration if any BOOM fails the fit-and-proper test or the controls are inadequate. HMRC registration is renewed each year by paying the annual fee for all listed premises.

Common Reasons for Refusal

Recurring themes in refused or cancelled registrations include:

• Inadequate risk assessments: generic or templated documents that do not reflect the applicant's actual business model, customer base or geographic exposure
• Weak CDD procedures: failure to articulate how the firm will verify customer identity, establish source of funds and apply EDD to higher-risk customers
• BOOM concerns: beneficial owners with undisclosed adverse financial history, unexplained gaps in employment or connections to jurisdictions subject to enhanced sanctions
• Insufficient resources: no dedicated compliance officer, no evidence of AML training programmes and no budget for ongoing monitoring technology
• Poor governance: absence of board-level oversight of financial crime risk, no escalation procedures for suspicious activity and no internal audit function

Ongoing Obligations After Registration

Registration is not a one-off event. Supervisors expect registered MSBs to maintain compliance continuously. Key ongoing obligations include:

• Annual renewal and updates: HMRC-registered MSBs renew each year by paying the annual fee for every premises, and must tell their supervisor about changes to premises, agents and responsible persons. FCA-authorised payment firms submit the FCA returns that apply to them
• Suspicious activity reporting: MSBs must file SARs with the National Crime Agency (NCA) whenever they know or suspect a transaction involves the proceeds of crime or terrorist financing
• Periodic risk reassessment: the business-wide risk assessment must be reviewed and updated at least annually or whenever there is a material change in business activities, customer base or geographic exposure
• Staff training: all relevant employees must receive AML/CFT training at induction and at regular intervals thereafter. Training must be documented and records retained
• Record-keeping: CDD records must be retained for five years after the business relationship ends. Transaction records must also be retained for five years

Enforcement and Supervisory Approach

HMRC and the FCA both take a risk-based approach to MSB supervision. Higher-risk firms, those with significant cash volumes, exposure to high-risk jurisdictions or a history of compliance concerns, receive more intensive oversight. Supervisory tools include:

• Themed reviews and desk-based assessments
• Announced and unannounced site visits
• Skilled person reports (section 166 of FSMA 2000, for FCA-authorised firms)
• Suspension or cancellation of registration
• Civil and criminal penalties for serious AML failures

Supervisors can and do cancel the registration of MSBs with inadequate AML controls. Firms that treat registration as a "set and forget" exercise are most likely to face enforcement action.

Practical Steps for Applicants

Invest in your risk assessment. This is the foundation document the FCA scrutinises most closely. It must be specific to your business, not a generic template purchased from a compliance consultancy. Identify your actual customer demographics, transaction corridors, cash-handling volumes and risk indicators.

Appoint a dedicated MLRO. The Money Laundering Reporting Officer (MLRO) must be a senior individual with genuine authority to escalate concerns and halt suspicious transactions. Supervisors view the MLRO as a critical control and assess their competence.

Budget for compliance technology. Manual transaction monitoring is inadequate for all but the smallest MSBs. Invest in screening software for sanctions, PEP and adverse media checks, and consider automated transaction monitoring if volumes justify it.

Prepare for ongoing supervision. Build compliance into your operating model from day one. Maintain contemporaneous records, document all CDD decisions and ensure your policies evolve as your business grows.

Regulatory Outlook

The Money Laundering and Terrorist Financing (Amendment) Regulations 2026 took effect on 30 June 2026. The main change for MSBs is that mandatory enhanced due diligence now applies to countries on the FATF call for action list (currently Iran, North Korea and Myanmar) rather than the wider FATF increased monitoring list. Grey-list countries remain a risk factor that must be weighed in the risk assessment. MSBs should update their risk assessments and EDD triggers accordingly.