In the UK, Her Majesty's Revenue & Customs (HMRC) has a crucial role in collecting taxes and providing targeted financial support to families and individuals. However, HMRC also collaborates with the FCA to investigate money laundering crimes and has implemented legislation to combat financial crimes. The aim of these regulations is to reduce the threat of money laundering in the UK.
As the UK's tax and customs authority, HMRC has a primary responsibility to collect funds for public services and provide financial support to those in need. HMRC is an impartial and efficient organization that oversees a range of taxes, including income tax, capital gains tax, oil income taxes, environmental taxes, excise taxes, and national insurance.
To combat money laundering, businesses in the UK must comply with the Money Laundering Regulations and register with HMRC for support. HMRC has also issued various regulations to tackle financial crimes, which include anti-money laundering legislation for businesses.
Sectors Supervised by HMRC for AML Regulations
In the UK, HM Revenue and Customs has established regulations for anti-money laundering that apply to certain institutions. It is up to businesses to determine if they fall under these regulations and must register with HM Revenue and Customs. Compliance with these regulations is mandatory and businesses are subject to regular audits. Specifically, seven sectors in the UK must comply with HMRC regulations to be regulated. However, if a business is supervised by The Financial Conduct Authority or another supervisory authority, registration with HM Revenue is not required. The following sectors are supervised by HMRC:
- Bill payment service providers not supervised by The Financial Conduct Authority
- Money service businesses not supervised by The Financial Conduct Authority
- High-value dealers
- Company service providers not audited by The Financial Conduct Authority or a professional organization
- Real estate agency businesses
- Accounting service providers not audited by a professional body
- Rental to agency companies
- Digital, telecommunications, and IT payment service providers not supervised by The Financial Conduct Authority
- Art market participants
Business Responsibilities Under Money Laundering Supervision
If a company operates a business that falls under the purview of HM Revenue and Customs' Money Laundering Regulations, it is required to adhere to certain responsibilities that must be fulfilled. One of the most crucial aspects is the execution of Customer Due Diligence measures to validate the identity of customers and assess the risks associated with them. Moreover, it is imperative that you have robust internal control and monitoring systems in place. The specific controls mandated may vary depending on the size of your business, the volume of customers, and the nature of services provided. It is imperative that you meticulously comply with these regulations to ensure the integrity and transparency of your business operations. Failure to do so may lead to severe penalties and legal consequences, in addition to damaging the reputation of your organization. Therefore, it is highly recommended that you stay abreast of all the latest developments in this area and take proactive measures to comply with the regulations. This will not only help your business avoid legal complications but also enhance its credibility and trustworthiness in the eyes of your customers and stakeholders.
HMRC's Money Laundering Supervision Penalties
In the UK, companies that abide by the regulations set by HM Revenue & Customs have the authority to implement measures, including levying a financial penalty, against those that do not comply with the Money Laundering Regulations. In more severe cases, businesses may face criminal prosecution. HMRC takes preventative measures by sending warning letters to non-compliant institutions. Failure to adhere to such notes may result in more stringent measures, even criminal prosecution. These measures are designed to promote compliance with obligations. The amount of fines imposed varies based on the reason for non-compliance, the severity of the offense, the size of the business, and the amount involved in money laundering activities.
Starting from 25 July 2018, HM Revenue & Customs has introduced a penalty administration fee for all anti-money laundering control penalties. If a business fails to perform tasks such as customer due diligence, risk assessment, policy, control, and procedure implementation, record-keeping, and ignoring warnings, they will be required to pay a £ 1,500 penalty handling fee for violations. In addition to these penalties, HM Revenue may also impose a fine of up to £ 350 for businesses that fail to register, report changes in their business, and provide information.