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You are viewing the version of the document as on 2021-10-25.

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FEES App 4.1 Introduction

Application

FEES App 4.1.1 G

1Regulation 102 of the Money Laundering Regulations provides the FCA with the power to charge fees to persons registered with the FCA under the Money Laundering Regulations to recover the cost of carrying out its functions under those regulations. The FCA charges a fee for registration forms submitted to it. The FCA also charges an annual periodic fee. The purpose of this Appendix is to set out the fees relating to cryptoasset businesses registered with the FCA under the Money Laundering Regulations. The fees for persons registered under the Money Laundering Regulations that are not cryptoasset businesses, authorised persons or otherwise registered with the FCA are set out in FEES Appendix 3.

FEES App 4.1.2 G
  1. (1)

    1The application fee which will be payable by a cryptoasset business applying for registration in the register maintained by the FCA under regulation 54(1A) of the Money Laundering Regulations is set out in FEES Appendix 4 Annex 1.

  2. (2)

    1The detail of the periodic fees which will be payable by cryptoasset businesses registered with the FCA under the Money Laundering Regulations is set out in FEES Appendix 4 Annex 2.

FEES App 4.1.3 G

1In this Appendix:

  1. (1)

    a “note” (indicated by “Note:”) after a provision indicates, for the convenience of readers, that it is a provision made pursuant to the Money Laundering Regulations;

  2. (2)

    a “G” in the margin indicates that the provision is guidance, which is designed to throw light on a particular aspect of a direction or the provisions imposing charges, but is neither binding nor an exhaustive description of a cryptoasset business’s obligations; and

  3. (3)

    a “D” in the margin indicates that the provision contains a direction made pursuant to the Money Laundering Regulations. Directions are binding upon the person or categories of persons to whom they are addressed.

Glossary

FEES App 4.1.4 G

1In this Appendix, except where we indicate otherwise, an expression in italics has the meaning given in the FCA’sGlossary.

FEES App 4.2 Application fees

General

FEES App 4.2.1

1A cryptoasset business making an application to register with the FCA under the Money Laundering Regulations must pay to the FCA, in full and without deduction, the fee specified in FEES Appendix 4 Annex 1.

FEES App 4.2.2 G
  1. (1)
    1. (a)

      1The registration fee is an integral part of a cryptoasset business’s registration with the FCA under the Money Laundering Regulations.

    2. (b)

      Any application received by the FCA without payment made of the fee specified in FEES Appendix 4 Annex 1, in full and without deduction, will not be treated as an application made under the Money Laundering Regulations.

    3. (c)

      Where this is the case, the FCA will contact the applicant to point out that the application cannot be progressed until the fee payable under FEES Appendix 4.2.1 has been received. If the fee, in full and without deduction, is not received, the application will be returned to the applicant and no application will have been made.

Method of payment

FEES App 4.2.3

1The sum payable under FEES Appendix 4.2.1 must be paid in pounds sterling online by Maestro, Visa Debit or credit card (Visa/Mastercard/American Express only). If this is not possible for technical or other reasons, the FCA may accept payment by banker’s draft, cheque or other payable order.

[Note: Regulation 102 of the Money Laundering Regulations]

Due Dates

FEES App 4.2.4

1A person making an application to register with the FCA under the Money Laundering Regulations as a cryptoasset business must pay the application fee on, or before, making the application.

[Note: Regulation 102 of the Money Laundering Regulations]

Refunds

FEES App 4.2.5 G

1Application fees paid under this Appendix are not refundable.

FEES App 4.3 Periodic fees

General

FEES App 4.3.1
  1. (1)

    1A cryptoasset business registered with the FCA under the Money Laundering Regulations must pay to the FCA the periodic fee applicable to it under FEES Appendix 4 Annex 2.

  2. (2)

    The payment in (1) must be made:

    1. (a)

      in full and without deduction; and

    2. (b)

      for every fee year during which, or part of which, it is registered with the FCA under the Money Laundering Regulations.

  3. (3)

    This provision is modified where FEES Appendix 4.3.5 applies, as stated in FEES Appendix 4.3.5.

[Note: Regulation 102 of the Money Laundering Regulations]

FEES App 4.3.2 G

1The FCA will issue invoices at least 30 days before the dates on which payments fall due.

Method of payment

FEES App 4.3.3

1A periodic fee payable under FEES Appendix 4.3.1(1) must be paid in pounds sterling using either direct debit, credit transfer (BACS/CHAPS), cheque, Maestro, Visa Debit or by credit card (Visa/Mastercard only).

[Note: Regulation 102 of the Money Laundering Regulations]

Modifications for cryptoasset businesses becoming subject to periodic fees during the course of the fee year

FEES App 4.3.4
  1. (1)

    1A cryptoasset business which becomes registered with the FCA under the Money Laundering Regulations during the course of a fee year must pay a fee based on its projected valuation for the first twelve months of its new business.

  2. (2)

    This is the valuation provided by the cryptoasset business in the course of its application or if not provided at that time, the valuation provided subsequently.

[Note: Regulation 102 of the Money Laundering Regulations]

Calculating the fee in the first year

FEES App 4.3.5

1To calculate its fee in its first year of registration a cryptoasset business must apply the formula (A+B) x C, where:

  1. (1)

    A = the minimum fee set out in FEES Appendix 4 Annex 2, unless already paid in which case this figure is 0;

  2. (2)

    B = the amount arrived at by applying the tariff rates to the cryptoasset business’s projected valuation for the first twelve months of its new business, as provided by it in accordance with FEES Appendix 4.3.4; and

  3. (3)

    C = the number of calendar months (inclusive) between the calendar month during which the cryptoasset business was registered with the FCA under the Money Laundering Regulations and the last month of that fee year ÷ 12.

[Note: Regulation 102 of the Money Laundering Regulations]

Calculating fees in the second fee-year where the cryptoasset business is registered between 1 January and 31 March in its first fee year

FEES App 4.3.6

1When a cryptoasset business is registered with the FCA under the Money Laundering Regulations between 1 January and 31 March, its fee for the following fee year starting 1 April will be calculated from:

  1. (1)

    the projected valuation for the first twelve months of its new business that it provided in accordance with FEES Appendix 4.3.4; or

  2. (2)

    an annualised figure based on actual data provided by 30 April in the fee year following obtaining its registration.

The annualised figure referred to in (2) is calculated by applying the formula (A÷B) x 12, where:

A = the total income from the date of registration up to the cryptoasset business’s financial year end or 31 March (whichever is sooner) of its first fee year; and

B = the number of months in the period referred to in A.

[Note: Regulation 102 of the Money Laundering Regulations]

Calculating all other fees in the second and subsequent years of registration where a full year of tariff data is not available

FEES App 4.3.7 D

1If it can, a cryptoasset business must provide data from a complete period that begins on or after the date that it was registered with the FCA.

[Note: Regulation 74A of the Money Laundering Regulations]

FEES App 4.3.8

If a cryptoasset business does not have sufficient tariff data to enable the periodic fee to be calculated in respect of that fee year, it must calculate an annualised figure based on actual data where possible, applying the formula (A÷B) x 12, where:

A = the total income from the date of registration with the FCA under the Money Laundering Regulations up to the cryptoasset business’s financial year end or 31 December (whichever is sooner); and

B = the number of months in the period referred to in A.

[Note: Regulation 102 of the Money Laundering Regulations]

FEES App 4.3.9 G

1For example, the valuation date specified in FEES Appendix 4 Annex 2 is based on income for the financial year ending during the calendar year ending 31 December before the relevant fee year starting the following April. If the cryptoasset business is registered in October and its financial year ends in June, by April it will not have been able to report on the basis of its financial year. The value of A would therefore cover the period from October to December and the value of B would be two i.e. November and December.

If the cryptoasset business was registered in June and its financial year ended in October, the value of A would cover June to October and the value of B would be four i.e. July to October.

Time of payment

FEES App 4.3.10

1If a cryptoasset business’s periodic fee paid under this appendix for the previous fee year was £50,000 or more, it must pay its periodic fee for the current fee year in two instalments as follows:

  1. (1)

    an amount equal to 50% of the periodic fee payable for the previous fee year by:

    1. (a)

      1 April; or

    2. (b)

      if the fee is payable after 1 April, within 30 days of the date of the invoice, in the fee year to which that sum relates; and

  2. (2)

    the balance of the periodic fee due for the current fee year by:

    1. (a)

      1 September; or

    2. (b)

      if the fee is payable after 1 September, within 30 days of the date of the invoice, in the fee year to which that sum relates.

[Note: Regulation 102 of the Money Laundering Regulations]

FEES App 4.3.11

1If a cryptoasset business’ periodic fee paid under this appendix for the previous fee year was less than £50,000, it must pay the periodic fee within 30 days of the date of the invoice for the fee year to which that sum relates.

[Note: Regulation 102 of the Money Laundering Regulations]

Late payment

FEES App 4.3.12

1If a cryptoasset business registered with the FCA under the Money Laundering Regulations does not pay the total amount of the relevant periodic fee before the end of the date on which it is due, it must pay an additional amount as follows:

  1. (1)

    if the fee was not paid in full before the end of the due date, an administrative fee of £250; plus

  2. (2)

    interest on any unpaid part of the fee at the rate of 5% per annum above the Official Bank Rate from time to time in force, accruing on a daily basis from the date on which the amount concerned became due.

[Note: Regulation 102 of the Money Laundering Regulations]

Recovery of Fees

FEES App 4.3.13
  1. (1)

    1Regulation 101 of the Money Laundering Regulations permits the FCA to recover charges imposed on cryptoasset businesses by the FCA under the Money Laundering Regulations as a debt owed to the FCA.

  2. (2)

    The FCA will consider taking action for recovery through the civil courts.

[Note: Regulation 101 of the Money Laundering Regulations]

Information on which fees are calculated

FEES App 4.3.14 D

1A registered cryptoasset business must submit to the FCA in writing the income information prescribed in FEES Appendix 4 Annex 2 as soon as reasonably practicable, and in any event, within two months of the valuation date. The FCA will use this information to calculate the periodic fee payable by the cryptoasset business.

[Note: Regulation 74A of the Money Laundering Regulations]

FEES App 4 Annex 2 Periodic fees payable by cryptoasset businesses registered under the Money Laundering Regulations

1[Note: Regulation 102 of the Money Laundering Regulations]

  1. (1) This table sets out the tariff base relating to the fee-block for cryptoasset businesses registered with the FCA under the Money Laundering Regulations. The tariff base in this Part is the means by which the FCA calculates the annual periodic fee payable to it by a cryptoasset business registered with the FCA under the Money Laundering Regulations.

    2. Fee-block

    Fee-payer

    Tariff base

    Valuation date

    G.23

    Cryptoasset business registered with the FCA under the Money Laundering Regulations

    Annual income, as defined in FEES Appendix 4 Annex 3

    The business’s financial year ended in the calendar year ending 31 December before the start of the period to which the fee applies

  2. (2) This table sets out the tariff rates applicable to cryptoasset businesses registered with the FCA under the Money Laundering Regulations.

    3. Tariff rates in relation to 2021/22

    Fee payable

    Amount payable

    Minimum fee, payable by all cryptoasset businesses

    £[]

    Variable fee, payable in addition to the minimum fee, on income above £100,000

    £[] per £1,000 or part-£1,000

FEES App 4 Annex 3 Definition of annual income for the calculation of fees

1In this Annex, “cryptoasset” has the meaning given to it in regulation 14A(3)(a) of the Money Laundering Regulations.

Part 1

Definition of annual income

(1)

“Annual income” is the gross inflow of economic benefits (i.e. cash, receivables and other assets) recognised in the cryptoasset business’s accounts during the reporting year in respect of, or in relation to, the provision in the United Kingdom of the activities for which it is registered as a cryptoasset business under the Money Laundering Regulations.

(2)

The figure should be reported without netting off the operating costs or business expenses (except under (3) below), but should include:

(a)

all brokerages, commissions, fees, and other related income (for example, administration charges, overriders, profit shares etc.) due to the cryptoasset business in respect of, or in relation to, the provision in the United Kingdom of the activities for which it is registered as a cryptoasset business under the Money Laundering Regulations and which it has not rebated to clients or passed on to other registered cryptoasset businesses (for example, where there is a commission chain).

PLUS:

(b)

any ongoing commission from previous business received by the cryptoasset business during the reporting year.

PLUS:

(c)

the “fair value” of any goods or services the cryptoasset business provided to clients. This is the commission equivalent or an estimate of the amount the cryptoasset business would otherwise have received, but for which it has made a business decision to waive or discount its charges.

(3)

The following deduction should be made:

(a)

The cost of purchasing a cryptoasset which is subsequently sold. This is to ensure parity between businesses which derive their income from fees and those which derive their income from the margins on sales.

Part 2

Guidance on reporting income

Calculating annual income

(1)

For the avoidance of doubt, the only revenue streams reportable are those which relate to the activities for which the fee payer is registered as a cryptoasset business under the Money Laundering Regulations. Other revenue streams that do not relate to these activities should not be reported.

Reporting period

(2)

The “reporting year” is the cryptoasset business’s financial year end during the calendar year prior to the FCAfee year. The fee year starts on 1 April.

(3)

The income that should be submitted to the FCA is the income that was recognised in the accounts of the relevant reporting year. This means that some income due may not be reported until the following year because it has not yet been recognised in the accounts, while other income may be carried forward from previous years.

Fair value

(4)

The cryptoasset business should report a “fair value” price for any services for which it has made a business decision not to charge to clients:

(a)

We consider fair value to refer to the amount at which goods or services could be exchanged in an arm’s length transaction between informed and willing parties, other than in a forced or liquidation sale.

(b)

For example, where a cryptoasset business has forgone or discounted the commission or fee it would actually have charged but for the business decision to grant a discount in a particular case or on a temporary basis, it should report the amount it would have otherwise have charged for providing equivalent activities.

Inclusions

(5)

Annual income should include:

(a)

all amounts due to the cryptoasset business arising out of the provision of the activities for which it is registered as a cryptoasset business under the Money Laundering Regulations, including regular charges and instalments due to it during the reporting year;

(b)

any payment from a parent to facilitate the discounting or forgoing of any amounts that would otherwise be charged in full to a client, to the extent that the payment exceeds the “fair value” price reported in accordance with paragraph (4) above;

(c)

administrative charges and any interest from income related to the activities for which it is registered as a cryptoasset business under the Money Laundering Regulations.

Prohibited deductions

(6)

Deductions should not be made for:

(a)

bad debts;

(b)

customer benefits such as cash rewards, complimentary travel insurance, air miles vouchers etc.;

(c)

items such as general business expenses (e.g. employees’ salaries and overheads);

(d)

fines or penalties levied against the cryptoasset business;

(e)

commission a cryptoasset business pays another party to arrange a transaction with a client unless it receives a fee in respect of the same transaction;

(f)

the difference (if positive) between the fee payable by a cryptoasset business to another party for arranging a transaction and the amount payable to the cryptoasset business by the end client in respect of that transaction (here, the cryptoasset business must net any excess payable by the end client to zero); and

(g)

payments made to clients by way of redress.

Exclusions

(7)

The following should be excluded from the calculation of annual income:

(a)

The cost of purchasing cryptoassets which are subsequently sold – see Part 1 Note (3).

(b)

To avoid double-counting, amounts which have been passed on to other cryptoasset businesses registered under the Money Laundering Regulations may be excluded from the calculation of annual income, for example, where there is a commission chain. Transfers of income to other businesses may be especially common within groups where, to present a single interface to clients, all amounts due to the group may be collected by one business for subsequent redistribution to other businesses within the group. It is for groups themselves to decide the most convenient way to report such annual income - i.e. whether the business which receives the full amount should declare that full amount, or whether each business in the group should report its separate distribution.

(c)

Any payment from a parent to facilitate the discounting or forgoing of any amount that would otherwise be charged in full to a client should be excluded to the extent that the payment does not exceed or equal the “fair value” price reported in accordance with paragraph (4) above.

(d)

Rebates to customers and fees or commissions passed onto other cryptoasset businesses registered under the Money Laundering Regulations.

Apportioning annual income

(8)

Where a cryptoasset business cannot separate its income on the basis of activities, it may apportion the income on the basis of the proportionate split of business that the firm otherwise undertakes. For instance:

(a)

A cryptoasset business may estimate the proportion of its business that is derived from activities for which it is registered as a cryptoasset business under the Money Laundering Regulations and split its income for individual invoices accordingly.

(b)

If a cryptoasset business receives annual income from a platform-based business it may report this in line with a wider breakdown of its activities.

(c)

A cryptoasset business may allocate ongoing commission from previous business on the basis of the type of business it receives the commission from. This avoids tracking back legacy business which may no longer match the provider’s current business model.

(d)

If a firm has invested income from the activities for which it has been registered as a cryptoasset business under the Money Laundering Regulations, then any interest received should be reported as income, in proportion to the volume of business it undertakes to avoid tracking back old payments.

(9)

It is for individual cryptoasset businesses to determine how they should calculate the appropriate split of income. The FCA is not prescriptive about the methodology. It requires only that:

(a)

The approach should be proportionate - the FCA is looking for cryptoasset businesses to make their best efforts to estimate the split.

(b)

The cryptoasset business must be able on request to provide a sound and clearly expressed rationale for its approach - for example, if all invoices were analysed over a particular period, it should be able to justify the period as representative of its business across the year.

(c)

The methodology should be objective - for example, based on random sampling of invoices or random stratified sampling.

(d)

The cryptoasset business must on request be able to provide an audit trail which demonstrates that the choice of methodology was properly considered at an appropriate level or in the appropriate forums within the business, and the decision periodically reviewed at the same level or in an equivalent forum.