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PART 2 U.K.Circumstances in which accepting a deposit is not a core activity

Circumstances in which accepting a deposit is not a core activityU.K.

2.—(1) In relation to a UK deposit-taker, accepting a deposit is not a core activity unless the deposit is a core deposit.

(2) A deposit is a core deposit if it is held with the UK deposit-taker in [F1a UK account or] an EEA account except where one or more of the account holders is—

(a)a relevant financial institution;

(b)a qualifying organisation;

(c)a qualifying group member; F2...

(d)an eligible individual; [F3or

(e)a person who is, or at any time within the previous six months has been, subject to financial sanctions.]

(3) In this article—

(a)a reference to an account held with a UK deposit-taker is to an account provided by the institution as part of its activity of accepting deposits;

(b)an account is an EEA account if it was opened at a branch of the UK deposit-taker located in an EEA state;

[F4(ba)an account is a UK account if it was opened at a branch of the UK deposit-taker located in the United Kingdom;]

(c)“branch” means a place of business that forms a legally dependent part of the UK deposit-taker and conducts directly all or some of the operations inherent in its business;

(d)“relevant financial institution” has the meaning given in the excluded activities and prohibitions order;

[F5(e)“financial sanctions” means any prohibition or obligation imposed under financial sanctions legislation as defined in section 143(4) of the Policing and Crime Act 2017.]

Textual Amendments

[F6Meaning of qualifying organisationU.K.

3.—(1) An organisation is a qualifying organisation in relation to a UK deposit-taker if that deposit-taker, having made reasonable inquiries, determines that the organisation meets the relevant qualifying condition for the relevant financial year.

(2) The relevant qualifying condition is set out—

(a)in the case of a body corporate or a partnership, in article 4;

(b)in the case of an organisation which is not a body corporate or a partnership, in article 5.

(3) Upon making a determination in accordance with paragraph (1), a UK deposit-taker must give notice to the organisation in writing—

(a)informing the organisation that the UK deposit-taker has made that determination;

(b)stating the reasons why the UK deposit-taker made that determination; and

(c)notifying the organisation that it has fourteen days from the date upon which the notice is given in which to submit representations to the UK deposit-taker if the organisation considers that the UK deposit-taker’s determination was based on a mistake of fact.]

Textual Amendments

Qualifying condition for a body corporate or a partnershipU.K.

4.—(1) The qualifying condition for a body corporate or a partnership is that during the relevant financial year that body or partnership met one or more of the criteria in table 1—

Table 1

TurnoverNot less than £6.5 million
Balance sheet totalNot less than £3.26 million
Number of employeesNot less than 50

(2) If the organisation has existed for less than one financial year, the maximum figure for turnover must be proportionately adjusted.

(3) The balance sheet total means—

(a)the aggregate of the amounts shown as assets in the organisation's balance sheet for the relevant financial year; or

[F7(b)where the UK deposit-taker—

(i)makes a determination as to whether the organisation meets the qualifying condition during the organisation’s first financial year; and

(ii)at the time the determination is made, the organisation has not yet prepared a balance sheet;

the aggregate of the amounts which would be shown as assets in a balance sheet prepared not more than six weeks before the date upon which that determination is made.]

(4) The number of employees means the average number of persons employed (whether full-time or part-time) by the organisation in the relevant financial year, determined as follows—

(a)find for each month in the relevant financial year the number of persons employed under contracts of service by the organisation (whether throughout the month or not);

(b)add together the monthly totals; and

(c)divide by the number of months in the relevant financial year.

(5) In this article “turnover”, in relation to a body corporate or a partnership, means the amounts derived from the provision of goods and services falling within the ordinary activities of the body corporate or partnership (“the gross receipts”), after deduction of—

(a)trade discounts;

(b)value added tax; and

(c)any other taxes based on the gross receipts.

Textual Amendments

Qualifying condition for an organisation which is not a body corporate or a partnershipU.K.

5.—(1) The qualifying condition for an organisation which is not a body corporate or a partnership is that the organisation's gross income for the relevant financial year was more than £6.5 million.

(2) In this article “gross income” means an organisation's gross income from all sources.

(3) For the purpose of paragraph (2)—

(a)the gross income of a charity or a CIO which—

(i)is not entered in the register of charities kept under section 3 of the Charities and Trustee Investment (Scotland) Act 2005 M1 (“the Scottish Charity Register”), and

(ii)is a member of a group as defined in section 141 of the Charities Act 2011 or paragraph 1(5) of Schedule 6 to the Charities (Northern Ireland) Act 2008 M2

includes the gross income of any charity or CIO which is a member of the same group, and

(b)the gross income of a charity or a CIO which—

(i)is entered in the Scottish Charity Register, and

(ii)has one or more subsidiary undertakings (as defined by regulation 1(2) of the Charities Accounts (Scotland) Regulations 2006) M3,

includes the gross income of any of those subsidiary undertakings which are charities or CIOs.

Marginal Citations

M12005 (asp 10).

M3S.S.I. 2006/218. There are amendments to regulation 1, but they are not relevant to this Order.

Qualifying organisation declaration accompanied by a confirming statement: requirements for confirming statementU.K.

F86.  . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Textual Amendments

Requirements concerning currency when qualifying organisation declaration accompanied by annual accountsU.K.

F87.  . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Textual Amendments

[F9Meaning of qualifying group memberU.K.

8.—(1) An organisation is a qualifying group member in relation to a UK deposit-taker if that deposit-taker determines that the organisation is a member of the same group as a qualifying organisation.

(2) Upon making a determination that an organisation is a qualifying group member, a UK deposit-taker must give notice to the organisation in writing—

(a)informing the organisation that the UK deposit-taker has reached that determination;

(b)specifying the identity of the relevant qualifying organisation; and

(c)notifying the organisation that it has fourteen days from the date upon which the notice is given in which to submit representations to the UK deposit-taker if the organisation considers that the UK deposit-taker’s determination was based on a mistake of fact.

(3) A notice given pursuant to paragraph (2) may be given at the same time as a notice given pursuant to article 3(3).]

Textual Amendments

Meaning of eligible individualU.K.

9.—(1) An individual is an eligible individual in relation to a UK deposit-taker if—

(a)that individual has provided to that UK deposit-taker a statement complying with paragraph (2) (a “declaration of eligibility”); and

(b)that declaration of eligibility is—

(i)accompanied by a statement signed and dated by a recognised accountant in accordance with paragraph (5) (a “confirming statement”), or

(ii)accepted by the UK deposit-taker to which that declaration is given without a confirming statement, in accordance with paragraph (6).

(2) A declaration of eligibility must—

(a)confirm that the individual giving the declaration meets the condition in paragraph (3);

(b)specify the period in respect of which the individual giving the declaration has calculated that they meet the condition in paragraph (3) (the “eligibility calculation period”); and

(c)be signed and dated by the individual giving the declaration.

(3) The condition mentioned in paragraph (2)(a) is that on average during the eligibility calculation period the individual giving the declaration of eligibility held assets to the value of not less than £250,000, as calculated in accordance with article 10.

(4) An eligibility calculation period specified in a declaration of eligibility in accordance with paragraph (2)(b) must be a period of twelve months ending on a day which falls not more than three months before the date of the declaration of eligibility in which it is specified.

(5) A confirming statement given in accordance with paragraph (1)(b)(i) must state that the recognised accountant signing the statement has reviewed—

(a)the declaration of eligibility; and

(b)any information relating to the assets on which the declaration of eligibility is based—

(i)of which the recognised accountant was aware at the time at which the recognised accountant was asked to make the confirming statement, or

(ii)which the recognised accountant has subsequently requested from the individual giving the declaration of eligibility,

and that nothing has come to the recognised accountant's attention which suggests that the declaration of eligibility is false.

(6) A UK deposit-taker may accept a declaration of eligibility without a confirming statement if it is satisfied that the declaration of eligibility is true.

(7) The date of a declaration of eligibility is the date given by the individual making the declaration when that individual dates the declaration.

Declaration of eligibility: determining assets held by an individualU.K.

10.—(1) For the purpose of preparing a declaration of eligibility the assets of an individual (“A”) must be calculated as follows—

(a)at the end of each quarter in the eligibility calculation period calculate the value of such assets held by A as are necessary to demonstrate that A meets the condition specified in article 9(3) to give quarterly totals; and

(b)add the quarterly totals together and divide by four.

(2) For the purpose of calculating quarterly totals—

(a)any money on deposit in a joint bank account for which A is one of the account holders shall be treated as held by A alone;

(b)if A holds any other asset jointly with one or more other persons, A shall be treated as holding —

(i)a share of the asset determined in accordance with any agreement between the owners of the asset concerning the shares in which they hold the asset, or

(ii)if there is no such agreement, a share of the value of the asset which is equal to the total value of the asset concerned divided by the number of joint owners.

(3) In this article “assets”, in relation to an individual, means assets of one of the kinds mentioned in paragraph (5) which are held—

(a)by that individual as legal and beneficial owner, solely or jointly with others; or

(b)by another person for the benefit of that individual (solely or jointly with others) under a trust.

(4) For the purpose of paragraph (3)(b) assets which are held in a part of the United Kingdom other than England or Wales or in a country or territory outside the United Kingdom are to be regarded as held under a trust if they are held under an arrangement under the law of that part, country or territory which corresponds to a trust.

(5) The kinds of asset referred to in paragraph (3) are—

(a)money, including money held on deposit; or

(b)transferable securities as defined in [F10 Article 2.1(24) of the markets in financial instruments regulation].

(6) In this article “joint bank account” means an account—

(a)opened in the name of two or more persons; or

(b)over which two or more persons have rights that are exercised by means of the signature of one or more of those persons.

(7) In this article, a reference to a quarter is a reference to any complete quarter falling within a core deposit calculation period for a UK deposit-taker.

Textual Amendments