Money Laundering Regulations: if you provide accountancy services, book-keeping, or tax advice and you are not 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 replaced the Money Laundering Regulations 2007 with effect from 26 June 2017.

HMRC operates a risk-based approach to its supervision of MLRs and will use information to find any Accountancy Service Providers (ASPs) that have not registered.

Accountancy Service Providers include accountants, auditors, tax advisers/consultants, bookkeepers, payroll agents, and customs practitioners.

Supervisory bodies include the:

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'.

What's new?

The Fifth Anti-Money Laundering Directive (5MLD) takes effect from 10 January 2020. This is extends the scope of the rules to letting agents, art dealers and crypto currencies into 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 2 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.

Penalties

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 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.

Links

AML: Anti-Money Laundering Zone
Start here for all our AML guidance and checklists

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.

HMRC late registration penalties

Cases

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 TC04183the 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.

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