Money Laundering Regulations: if you provide accountancy services, book-keeping, tax advice or trust and company formation services and you are not already a member of a Supervisory body recognised under the regulations you must register your business with HMRC.
The Money Laundering, Terrorist Financing and Transfer of Funds (Information on the Payer) Regulations 2017/692 (MLR) replaced the Money Laundering Regulations 2007 from 26 June 2017.
HMRC operates a risk-based approach to its supervision of MLR and will use information to find any Accountancy Service Providers (ASPs) that have not registered.
ASPs include accountants, auditors, tax advisers/consultants, bookkeepers, payroll agents, and customs practitioners.
From 1 September 2022, the MLRs are amended to include a trust and company service provider (TCSP):
- If you form any type of business arrangement that must be registered with Companies House, you will fall within MLR, e.g. forming companies, appointing directors or partners etc.
- A TCSP is described as "a firm or sole practitioner who, by way of business, provides any of the services listed within that regulation". This includes acting (or arranging for another person to act) as a director or secretary of a company, as a partner of a partnership or in a similar capacity in relation to another legal person and acting as a trustee of an express trust or similar legal arrangement or as a nominee shareholder for a person other than a company whose securities are listed on a regulated market.
Supervisory bodies include the:
- Association of Accounting Technicians
- Association of Taxation Technicians
- Association of International Accountants
- Association of Chartered Certified Accountants
- Chartered Institute of Management Accountants
- Chartered Institute of Taxation
- Insolvency Practitioners Association
- Institute of Certified Book-keepers
- Institute of Chartered Accountants in England & Wales
- Institute of Chartered Accountants in Ireland
- Institute of Chartered Accountants of Scotland
- Institute of Financial Accountants
- International Association of Book-keepers
Under the regulations the ASP will need to appoint a relevant person to take responsibility for the following (non-exhaustive):
- Creating, regularly reviewing and updating policies and controls to mitigate or manage risks of money laundering.
- Communicate with the rest of the business what those policies and controls are and monitor compliance with these.
- Screen staff and check competencies and integrity.
- Establish money laundering audit functions.
- Ensure that employees are trained in the policies and controls.
- Record in writing all of the above.
This person will need to be approved by the supervisory body as a 'fit and proper person'.
1 September 2022:
- As noted above, trust and company service providers fall within MLR.
- Crypto-asset transfers above EUR1,000 have to be accompanied by detailed personal information of both its originator and beneficiary under the Financial Action Task Force's 'travel rule' .
- Limited partnerships that are registered in England, Wales and Northern Ireland under the scope of the MLRs.
- The obligation to report material discrepancies in beneficial ownership information covers ongoing customer due diligence on existing business relationships.
- A period of grace will be allowed for the travel rule until 1 September 2023, and for discrepancy reporting until 1 April 2023.
10 January 2020:
- The Fifth Anti-Money Laundering Directive (5MLD) takes effect from 10 January 2020. This extends the scope of the rules to letting agents, art dealers and cryptocurrencies into the scope of the rules and makes it mandatory to check the beneficial ownership of new client entities.
In 2018 HMRC opened a new consultation “Discussion Document on HMRC’s anti-money laundering supervision fees". This proposed various different options for new fee structures for registering with HMRC. The majority of respondents favoured option two which was to alter the fee structure to:
- No longer use the number of premises.
- Charge a two-part fee; a flat fee of £100 per business plus a low turnover-based fee, e.g. 0.03%.
However, in several areas, the majority of respondents had no preference. Following the consultation, from May 2019 HMRC increased fees as follows:
- £300 annual renewal fee per premises for businesses with turnover above £5,000 (£180 below £5,000)
- £150 per person requiring a fit and proper test for money service businesses and trust or company service providers.
From 1 April 2010 HMRC imposes sanctions on businesses which have not registered under the Money Laundering Regulations.
- The late registration penalties policy applies to Money Service Businesses, (MSBs) High-Value Dealers, (HVDs) Trust or Company Service Providers, (TCSPs) as well as to ASPs.
- Should a business fail to register with HMRC when it is required to it will be liable to a fixed penalty and any unpaid fees.
- The late registration penalty will be based on a fixed penalty and any unpaid fees.
Prosecution of Trust of Company Service Providers and ASPS
- From 01 April 2010 Trust or Company Service Providers and ASPs who have not registered with HMRC will be liable to a penalty or prosecution.
AML: Anti-Money Laundering Zone
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AML: Anti-Money Laundering checks and guidance
A detailed guide to Anti-Money Laundering (AML) procedures and checks, including what factors to consider when taking on a new client and conducting your 'know your client' procedures.
In Munatsi Logistics Ltd v HMRC TC0653, the First Tier Tribunal rejected an appeal against HMRC’s decision to refuse the appellant registration under the Money Laundering Regulations 2007.
In Michael Hunt v HMRC TC04183, the First Tier Tax Tribunal (FTT) considered what is meant by the term “fit and proper person” for the purposes of registration under the Money Laundering Regulations 2007.