A Depository Institution is an institution that accepts deposits in the ordinary course of a banking or similar business. For the purposes of the Agreement
HMRC will regard a person carrying out an activity in the UK that is a regulated activity for the Financial Services and Markets Act 2000 by Article 5 of the Financial Services and Markets Act 2000 (Regulated Activities) Order 20011 (accepting deposits) as a Depository Institution.
Entities within this definition will include entities regulated in the UK as a savings or commercial bank, a credit union, industrial and provident societies and building societies. In considering Article 5 HMRC will apply the relevant exclusions contained therein – for example, insurance brokers and solicitors would not be expected to fall within this definition. However in considering whether an entity is conducting banking or similar business, it will be the actual activities that the entity carries out that will be determinative.
Entities that issue payment cards that can be pre-loaded with funds in excess of $50,000 to be spent at a later date, such as a pre-paid credit card or “e-money” will also be considered to be Depository Institutions for the purposes of the Agreement, notwithstanding that these entities are exempt from the definition of a Depository provider for the purposes of the provisions of the Electronic Money Issuers Regulations 2011.
Entities that solely provide asset based finance services or that accept deposits solely from persons as collateral or security under; a sale or lease of property; a loan secured by property; or a similar financing arrangement, between such entity and the person making the deposit with the entity, will not be Depository Institutions. This might, for instance, apply to a factoring or invoice discounting business.
Entities that facilitate money transfers by instructing agents to transmit funds (but do not finance the transactions) will not be considered to be engaged in banking or similar business as this is not seen as accepting deposits.