ECSH48025 - Cancellation and suspension of registration
Source: gov.uk (2025-01-23)


Under regulation 60 of The Money Laundering, Terrorist Financing and Transfer of Funds (Information on the Payer) Regulations 2017 (MLR 2017) HMRC may suspend or cancel a business’s registration in certain circumstances. See ECSH83575 (https://www.gov.uk/hmrc-internal-manuals/economic-crime-supervision-handbook/ecsh83575) and ECSH83585 (https://www.gov.uk/hmrc-internal-manuals/economic-crime-supervision-handbook/ecsh83585) which set out the circumstances under which we may suspend or cancel a registration.

The suspension or cancellation of registration can take effect immediately or on a given date. See below for information on this.
- Suspension is a significant (albeit temporary) sanction which prevents the business from legally trading for a period of time. It should be applied for the minimum length of time necessary (e.g. for the business to address the money laundering/terrorist financing risks/non-compliance and to satisfy the decision maker that these have been sufficiently addressed and remedied, or due to us believing that there are significant ongoing ML/TF risks in a business which require further investigation – e.g. for us to consider fit and proper (F&P) following a beneficial owner, officer or manager's (BOOM’s) arrest on money laundering (ML) charges.
- Cancellation of registration is considered a severe sanction as it prevents the business from legally trading in a relevant activity permanently by removing the business from the register. It is therefore only to be used in the most serious cases and/or sustained non-compliance and risk (where allowing the business to remain on the register presents too great a risk).
Power to suspend or cancel registration – regulation 60 MLR 2017

Regulation 60 MLR 2017 sets out that HMRC may suspend or cancel a person's registration in various circumstances. The power to suspend or cancel a business’s registration is therefore a discretion rather than a duty.

When exercising a discretion to suspend or cancel registration it is important that the rationale for the decision is sufficient to justify the decision, and that the rationale is clearly recorded and supported by evidence.

The cancellation or suspension must be necessary and proportionate to deal with the money laundering/terrorist financing (MLTF) risks identified, based on the specific facts of the case. It is important to consider whether other less onerous sanctions could appropriately address the non-compliance and or MLTF risks presented by the business.

Standard of proof in regulation 60 MLR 2017

Different grounds for suspension or cancellation are set out in regulation 60 MLR 2017. It is important to note that some grounds for suspension or cancellation contain higher standards of proof and this should be taken into account in the decision-making process.

Regulation 60(2) MLR 2017 requires HMRC to be satisfied that the business or it’s BOOMs are not fit and proper. The standard of proof in regulation 60(3) MLR 2017 includes the that the applicant will fail to comply with a requirement of regulation 59(1)a - e. This is a much lower standard than that which is required for a suspension under regulation 60(2) MLR 2017 (fit and proper grounds) and is therefore an easier threshold to cross.

Regulation 60(3) MLR 2017 therefore provides a much wider scope for HMRC to make a case on a lower standard of proof (reasonable suspicion) than that required under regulation 60(2) MLR 2017.

One example of when it may be appropriate to rely on regulation 60(3) MLR 2017 to suspend is where HMRC has entered supervised premises and seized a considerable amount of documentation which needs review and has reasonable grounds to suspect that the obligations within MLR 2017 or Proceeds of Crime Act are unlikely to be complied with going forward. There is no need for the decision-maker to find that there has been an actual non-compliance. All the decision maker needs to have is evidence of reasonable grounds to suspect they will fail to comply going forward in order to suspend registration for a period of time to gather all the evidence to allow them to make a rational and well-informed decision as to whether to proceed to cancellation.

See ECSH83525 (https://www.gov.uk/hmrc-internal-manuals/economic-crime-supervision-handbook/ecsh83525) which sets out the standard of evidence required for a cancellation or suspension.

The right to make representations and procedural fairness

Whereas MLR 2017 requires the Financial Conduct Authority (FCA) to invite representations, it does not require the Commissioners (HMRC) to do so. Even on a review of a decision by the Commissioners, there is no duty to invite representations (regulation 98 MLR 2017). However, It is HMRC policy to allow representations where possible, and the EC-S approach to representations aligns with the broader HMRC approach.

However, the courts have made clear that decision-makers’ powers are to be operated in a fair manner, which is known as “procedural fairness”.

Procedural fairness is particularly important when the decision (and/or its consequences) is severe. The courts are not hesitant to imply an additional duty of fairness by inviting representations where legislation does not provide for such a mechanism.

There have been a number of case where the courts have considered the right to make representations.

The courts tend to take into account various factors, including:
- How severe the decision is (also bearing in mind the discretionary nature of regulation 60 MLR 2017).
- How quickly the decision it comes into effect
- Whether there is any reason representations should not be sought.
- The effect such a decision would have on the person/business.
- Any continued conduct of the authority which may have raised an expectation that no power would be used.
- Any concurrent criminal proceedings.
- The time passed since the inception of the criminal investigation during which the businesses were still allowed to operate,
- Whether any concerns were raised during interactions and communications with the business.
Because of the nature of a suspension (a temporary, albeit significant sanction), it is likely, when considering the facts of the case, that an intention to suspend letter will not be needed. As suspension is used to address an immediate and ongoing risk, it needs to happen quickly. Giving advance notice via an intention to suspend letter may undermine the suspension. However, most suspensions occur following a long compliance investigation, which allows the business to make representations while the compliance investigation is ongoing, negating the need for an intention to suspend letter. In each immediate suspension, the facts of the case and the need to allow the business to make representations will need to be carefully considered.

In contrast, a cancellation is permanent, severe sanction, and as such, an intention to cancel notice should be given, in order to allow the business to make advance representations, unless there are exceptional circumstances in which cancellation with immediate effect is required (see below). There may be circumstances where an immediate suspension, with a notice of intention to cancel the registration, may be required. This would allow the business to make representations before cancellation comes into effect.

It is therefore important that the decision as to whether to allow the business to make advance representations is carefully considered on a case-by-case basis and includes consideration of the duties under the HMRC Charter (https://www.gov.uk/government/publications/hmrc-charter/the-hmrc-charter), particularly the principle of “treating you fairly”.

Cancellation or suspension with immediate effect

Regulation 60(10) MLR 2017 states that we must consider if the interests of the public require the suspension or cancellation of a business’ registration to have immediate effect.

There are three situations when an immediate cancellation or suspension would be in the public interest:
- Where there is a significant risk of money laundering, terrorist financing or proliferation financing that needs to be immediately addressed.
- Where there is, or has been, serious non-compliance that must be stopped immediately.
- Where the business has been informed of our intention to issue a cancellation or suspension and have been given the opportunity to make representations, and where representations have been received, they have been fully considered.
If we consider it in the public interest for the cancellation or suspension to have immediate effect, we must include a statement to that effect and explain the reasons why in the notice of cancellation/suspension. Where this discretion is exercised, it means that the cancellation or suspension takes effect when the notice is given.

If it is not in the public interest for the suspension or cancellation to be given with immediate effect, the notice should detail the date that the sanction will take effect from. There is no provision within the regulations specifying the period of time in which it will take effect.

The officer will need to give consideration to the period of time the business would require to wind down, taking into account all of the circumstances of the case, in order to determine the date on which it will take effect. That being said, officers should aim for consistency between businesses and where there is a case that allows for more or less time than the norm, the reasons for this should be clearly recorded.

Public interest has no legal definition and where it lies in a case will be specific to that case and a matter of judgement. Courts have considered the definition and in the case of (1855) 24 L.J.Q.B. 84 it accepted the definition of public interest as “that in which a class of the community have a pecuniary interest, or some interest by which their legal rights or liabilities are affected”. Making decisions in the public interest should serve the greater good and promote the welfare of society as a whole, rather than focusing on the individual business. For further information see ECSH83625 (https://www.gov.uk/hmrc-internal-manuals/economic-crime-supervision-handbook/ecsh83625).

Where the decision maker concludes that immediate suspension or cancellation is in the public interest, this must be supported by a clear rationale. It is also important that the case is progressed without delay an any argument that immediate suspension or cancellation is in the public interest weakens with the passage of time.

Suspension of registration

The grounds for suspension (https://www.gov.uk/hmrc-internal-manuals/economic-crime-supervision-handbook/ecsh83525) must be made out and adequately supported by MLR 2017. The length of the suspension is key in any decision made to impose the suspension, as the longer the suspension continues, the greater the risk of successful legal challenge.

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Cancellation of registration

The grounds for cancellation must be made out and adequately support by MLR 2017. As cancellation is a severe sanction, permanently preventing a business undertaking relevant activity under MLR 2017, it is likely to come under greater scrutiny by a court or tribunal if challenged. To reach a robust, rational and well-informed decision, decision-makers must have gathered all the evidence necessary, including engaging with other stakeholders as required.

As set out above, the opportunity for the business to make advance representations against a decision to cancel its registration should be carefully considered.

Date cancellation/suspension takes effect

Where EC-S have decided that suspension or cancellation of registration is an appropriate sanction, we inform the business via a notice of decision. The notice of decision will detail the date at which the suspension or cancellation will take effect. For more information see ECSH83725 (https://www.gov.uk/hmrc-internal-manuals/economic-crime-supervision-handbook/ecsh83725).

The suspension or cancellation of registration will take effect immediately or on a given date, depending on the circumstances of the case and the level of risk involved.

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Auto-cancellations

Where a registration is cancelled under the auto cancellation process, the cancellation comes into effect 14 days from the date of the cancellation notice.

For more information on auto cancellations see ECSH48075 (https://www.gov.uk/hmrc-internal-manuals/economic-crime-supervision-handbook/ecsh48075).