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News & Portal: Money Laundering

Money Laundering Supervision Appeals and Penalties

27 July 2020  
Posted by: HMRC
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By HMRC

What to do if you disagree with an HMRC decision, and the penalties for not following the rules.

Updated 14 July 2020 

 

Contents

  1. If you disagree with an HMRC decision
  2. Penalties if you do not comply with the regulations
  3. Penalty administration charge
  4. Proceeds of Crime Act and the Terrorism Act offences

HMRC may impose measures, including a financial penalty, if you do not comply with the Money Laundering Regulations. In more serious cases, it may consider criminal prosecution.

This guide tells you what you can do if you disagree with an HMRC decision. It explains:

  • when to ask for a review
  • when to appeal to the tribunal
  • civil penalties and criminal offences under the Money Laundering Regulations

 

If you disagree with an HMRC decision

Challenging an HMRC decision

You might want to challenge an HMRC decision if, for example, HMRC:

  • refuses to register your business under the Money Laundering Regulations
  • charges you a penalty for not complying with the regulations
  • publishes a statement
  • prohibits a person from managing

If you disagree with your registration being suspended or cancelled write to:

Fraud Investigation Service 
FIS Individuals & Business 
SO987 
Newcastle 
NE98 1ZZ 

When HMRC will offer you a review

When HMRC tells you about a decision, it will usually offer you a review by an officer who was not involved in the original decision.

You cannot carry out any regulated activity while HMRC does a review if the decision was to:

  • refuse to register your business
  • cancel your registration

When you can appeal the decision

You can appeal to a tribunal if you disagree with the outcome of the review.

 

Penalties if you do not comply with the regulations

You’ll be protected from penalties and prosecution if you can show you have followed HMRC’s Money Laundering Regulations guidance. HMRC can take various measures from warning letters to criminal prosecution if your business does not comply with the regulations.

These measures are to encourage you to comply with the regulations. The action that HMRC takes depends on the seriousness and potential impact of the failures identified.

You may have to pay a penalty to HMRC if you fail to comply with the regulations.

The penalty that HMRC imposes must be appropriate for the failure and at a level that:

  • is proportionate to the failure
  • deters non-compliance

The amount of the penalty will take account of the:

  • reason for non-compliance
  • seriousness of the offence
  • compliance history of the business
  • relative size of the business
  • benefits received
  • amount exposed to money laundering activities

HMRC will allow reductions to the penalty when you make an unprompted disclosure that you have breached the regulations. An unprompted disclosure is when you contact HMRC before it contacts you for any type of enquiry or intervention.

You should make a disclosure to HMRC by email, which should include how you intend to become fully compliant.

You can find detailed information about the penalties for failing to comply with the Money Laundering Regulations in the HMRC civil measures guidance.

 

Penalty administration charge

HMRC introduced a penalty administration charge for all anti-money laundering supervision penalties issued from 25 July 2018. The charge is for costs of issuing penalties to businesses that do not comply with the Money Laundering Regulations.

Compliance penalties

You’ll have to pay a £1,500 penalty administration charge as well as the penalty for breaches of the Money Laundering Regulations such as failures for:

  • customer due diligence
  • risk assessment
  • policies, controls and procedures
  • record keeping

If the penalty amount is less than £1,500, the penalty administration charge will be capped at the value of the penalty.

All other penalties

HMRC will charge up to £350 as well as the penalty for failures to:

  • register
  • tell HMRC of changes to your business
  • provide information

 

Proceeds of Crime Act and the Terrorism Act offences

If you do not comply with the Money Laundering Regulations you could be committing offences under the:

  • Proceeds of Crime Act 2002
  • Terrorism Act 2000

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