Anti-money laundering supervision report 2023-24

The report covers 6 April 2023 to 5 April 2024 and provides information about the performance of Anti-Money Laundering (AML) and Counter-Terrorist Financing (CTF) supervisors.

In 2023, HM Treasury’s (HMT) review of the UK’s AML/CTF regulatory and supervisory regime highlighted that the Government remains committed to tackling money laundering, terrorist financing and corruption. They will continue to deliver the Economic Crime Plan 2023-26, (ECP2) announced in 2023.  

The ECP2 will build on the previous year's commitments by continuing to: 

• Consult on an agreed package of changes, to improve the effectiveness of the Money Laundering Regulations (MLRs) and reform the UK’s future AML/CTF supervisory regime.
• HMT and the Office for Professional Body Anti-Money Laundering Supervision (OPBAS) will continue to strengthen existing oversight of the AML/CTF supervisors.
• Help AML/CTF supervisors to make further improvements to their effectiveness.

The report this year has expanded on the information it provides in the following areas: 

• Supervision activities. 
• Ensuring compliance. 
• Cooperation, coordination and information sharing. 

Additionally, there is a view to reform the UK's supervision regime with potential options for reform being consulted on in 2023. The Government remains committed to the reform. 

During 2023-24, there were 9,013 desk-based reviews and onsite visits conducted (2022-23: 5,253). This represents 10% of supervised firms being subject to direct supervisory action in 2023-24, an increase from 5.5% in 2022-23. This is the highest total of desk-based reviews and on-site visits since before the pandemic. 

HMRC had 412.6 full-time employees dedicated to AML supervision in 2023-24, up from 397 in 2022-23. 

In 2023-24, HMRC conducted 499 desk-based reviews and 944 onsite visits. Of the total desk-based reviews and onsite visits, 615 visits resulted in non-compliant assessments. This equates to 43% of visits. 

The percentage of total visits by HMRC to high-risk businesses was 47%, medium-risk visits were 20%, and low-risk visits were 33%.

The most frequent forms of non-compliance identified by HMRC included:

• Inadequate record-keeping.
• Inadequate firm-wide Risk assessment.
• Inadequate Policies, controls, and procedures.
• Inadequate Customer Due Diligence (CDD) measures, including in cases requiring enhanced CDD.

In 2023-24, HMRC conducted 'Mass Market Interventions' to encourage compliance in those areas that had been found inadequate or failing. Businesses were prompted to update their risk assessments, policies and controls. 

Additionally, a random sampling of medium and low-risk businesses was undertaken to ensure that risking processes were effective. Of 123 businesses randomly selected, 54% were found to be non-compliant. 

HMRC use a wide range of enforcement tools to ensure compliance including: 

• Financial penalties. 
• Referral to law enforcement. 
• Suspension or cancellation of a business's registration. 

During 2023-24, HMRC issued 977 fines for AML and CTF breaches. Of the 977 fines, 96% were issued to high-risk businesses. 

Accountancy Professional Body Supervisors (PBSs) breaches remained the same as 2022-23:

• Inadequate documented policies and procedures.
• Inadequate CDD procedures.
• Inadequate client risk assessment or records.
• No or inadequate firm-wide risk assessment.

As in 2023-23, the common reasons for PBS breaches were a lack of knowledge or understanding of the regulations was a theme among non-compliant firms or those with poor procedures. This was sometimes due to the size of the firm or its available resources and was often linked to using templates or third-party policies without tailoring. Smaller firms and sole practitioners sometimes considered the regulations to be disproportionate.

The table in the Data tab summarises the enforcement activity of the accounting PBSs and HMRC.

Note: HMRC’s figures include its supervision of estate and letting agency businesses, art market participants, high-value dealers, money service businesses, trust and company service providers who are not supervised by the FCA or PBSs, as well as accountants who are not supervised by one of the accountancy PBSs.