Businesses reminded of registration requirements

Businesses that provide, or advertise as offering, certain services without first being registered with the Isle of Man Financial Services Authority could face a penalty of up to £5,000.

The Authority is seeking to raise awareness of the issue after dealing with a number of contraventions of the Designated Businesses (Registration and Oversight) Act 2015.

Firms and individuals are encouraged to be aware of their responsibilities under the Act, including the need to be registered in order to trade. The legislation covers a range of non-financial businesses and professions – known as designated businesses or DNFBPs – including accountants, bookkeepers, crypto companies, estate agents, payroll agents, and tax advisers.

Instances have come to light recently, particularly via social media, where firms have been promoting or performing services without having the necessary registration in place.

Examples include a company that advertised on Facebook its ability to conduct property sales when it was not registered to do so, and an accountancy firm that started client activities before applying to register. The accountancy firm then continued to trade throughout a period when it struggled to provide the information required to complete its registration.

The Authority remains vigilant to any potential contraventions as part of its focus on protecting consumers, reducing financial crime and maintaining confidence in the financial services sector.

It monitors designated business activities to ensure compliance with requirements in relation to anti-money laundering (AML) and countering the financing of terrorism (CFT).

Investigations have led to action being taken against five firms in the past two years, resulting in civil penalties totalling £20,000, with a further £5,000 due to be paid imminently.

Anyone who is considering starting a new business is encouraged to speak to the Authority at the earliest opportunity and to check the resources available on the website at www.iomfsa.im

Officers can provide support and guidance, as well as assist applicants through the registration process.

Ashley Whyte, Senior Manager in the Authority’s AML/CFT Division, said: ‘We are keen to work with people to ensure they have a thorough understanding of their responsibilities. Firms or individuals involved in certain business activities are at risk of abuse from money laundering or the financing of terrorism, and those business activities are listed as “designated”. Registration, and the requirement to have robust controls in place, helps businesses to protect themselves, their employees and, more widely, their families and community from the dangers associated with dealing with criminals.’

Mrs Whyte added: ‘Firms must not carry out or even start marketing a designated business activity without first being registered. We will investigate and take appropriate action if necessary. If you are thinking of launching a new service and aren’t sure if it needs to be registered, please talk to us, visit our website and seek appropriate legal advice.’

Notes for editors:

Section 7 of the Designated Businesses (Registration and Oversight) Act 2015 states:

(1) A person must not carry on, or hold itself out as carrying on, a designated business in or from the Island unless the person —

(a) is registered under this Act or exempted from being so registered;

(b) is acting in accordance with the terms of that registration or any condition on exemption; and

(c) complies with AML/CFT legislation