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Money Laundering Regulations : Business Inspection

By HMRC

Overview

HM Revenue & Customs (HMRC) may visit your business if it’s registered under the Money Laundering Regulations.The purpose of the visit is to check that you’re complying with Money Laundering Regulations. HMRC will look at how you operate your anti-money laundering policies and procedures and help you make sure you’ve put the right systems in place.

This guide explains what to expect if HMRC contacts you to arrange a visit, so that you know:

  • who should be present
  • what the visiting officer will focus on
  • records they’ll want to see

Why HMRC visits businesses

HMRC makes sure that businesses registered with it are complying with the Money Laundering Regulations.

A visiting officer may attend your business if information suggests there is a risk that money laundering could take place. If HMRC does decide to visit your business this doesn’t necessarily mean it thinks there’s something wrong.

When HMRC’s representative visits your business they’ll make sure you understand the Money Laundering Regulations. It’s a good opportunity to ask about anything you’re unsure of.

They’ll look at your anti-money laundering policies and procedures to check that you’re only doing what’s really necessary, and check you know about any simplified procedures you could take advantage of.

How HMRC contacts you to arrange a visit

If HMRC decides to visit your business it’ll generally contact you by phone to arrange a convenient time.

The visiting officer will normally visit your main business premises so they can:

  • see how your anti-money laundering policies and procedures work
  • have access to all the records and paperwork relating to your procedures
  • speak to the right people

You should let HMRC know if you want the visit to take place at a different business premises.

HMRC will write to you and confirm:

  • the date and time of the visit
  • who the visiting officer will want to speak to
  • the information the visiting officer will want you to give them
  • the records and documents the visiting officer will want to see

Usually it’ll let you know in advance the names and contact numbers of the visiting officer.

Exceptionally, HMRC may visit a business without making an appointment. If it does, the visitor will:

  • identify themselves
  • give a reason for the unannounced visit

Who HMRC’s officer will want to talk to at the visit

When the visiting officer arrives at your business premises they’ll need to talk to the owner of the business.

After that, as the owner of the business you don’t need to be there so long as a responsible person is present who can:

  • answer the visiting officer’s questions
  • give the visiting officer any documents or information they need

Your nominated officer - and the person in the business who’s responsible for complying with Money Laundering Regulations if that’s someone else - should always be there during the visit.

A visiting officer will look at your policies and procedures and test them to make sure they’re working properly. They’ll need to speak to you as the business owner, your nominated officer and sometimes other members of staff to make sure you all understand the policies and procedures and have applied them in your business.

Having your professional adviser there

You can ask a professional adviser to be present during the visit but they cannot stand in for you. Only you can answer the visiting officer’s questions about your business. Your adviser may be able to explain things better or make things clearer, especially if they were involved with setting up your anti-money laundering policies and procedures or with staff training, but remember they may charge you for this.

What HMRC’s officer does at the visit

When the visiting officer arrives at your premises they’ll identify themselves and show you their identity card.

They’ll focus on your anti-money laundering policies and procedures to make sure these are working effectively to identify and reduce the money laundering risks your business might face.

The visiting officer always:

  • checks that the information on the HMRC register is correct
  • checks that the right people have taken the ‘fit and proper’ test if your business is a Money Service Business or a Trust or Company Service Provider
  • looks at the anti-money laundering policies, procedures and training you’ve put in place to manage and reduce the risks you’ve identified
  • asks you to explain how your anti-money laundering policies and procedures work
  • looks at your risk assessment of your customers, products and services

They’ll also answer any questions you might have about your legal responsibilities under anti-money laundering legislation.

The officer may also carry out some other checks. They may:

  • examine your records of transactions
  • check your customer due diligence procedures
  • see how effective your systems are for identifying and reporting suspicious activity to the National Crime Agency (NCA)
  • check that your staff know about anti-money laundering legislation and that they’re trained to recognise and deal with suspicious activity
  • make sure you’ve got the right systems in place

The visiting officer may inspect any cash they find on your premises if you’re a High Value Dealer or a Money Service Business. They’ll check that your anti-money laundering policies and procedures cover pawnbroking if you offer this as part of your Money Service Business.

What records HMRC’s officer will want to see

In addition to other checks, the visiting officer might ask to see:

  • internal audits of how you’ve complied with internal anti-money laundering procedures and controls
  • an external auditor’s report, if this covers your business’s compliance with the Money Laundering Regulations
  • relevant bank statements
  • copies of and references to material proving a customer’s identity
  • a job description of the senior manager in your business who is responsible for complying with anti-money laundering legislation
  • records of suspicious transactions and of the action you took
  • copies of any Suspicious Activity Reports you submitted to the NCA, and any correspondence from the NCA concerning consent to proceed

The visiting officer will only look at Suspicious Activity Reports for anti-money laundering legislation purposes. They won’t look at them for tax purposes.

At the end of the visit

HMRC aims to carry out their visit as quickly as possible. Unless you’re a large or complex business it’ll usually take less than a day.

At the end of the visit the visiting officer will:

  • review with you what they’ve done
  • explain any areas of concern
  • agree with you any action you need to take
  • answer any questions you have

After the visit

After the visit, HMRC will write to you:

  • setting out any action you need to take
  • warning you if you may be liable to pay a penalty (although businesses that follow the HMRC guidance will not be liable to a penalty and will have protection from prosecution)

They’ll give you a reasonable amount of time to let them have any information they need, and to put right any problems.

The interval between visits

The length of time before HMRC visits your business again varies. It depends on:

  • the size of your business and how complex it is
  • what type of customers you have
  • your previous record of complying with the Money Laundering Regulations

Published March 2016