MLR1PP15020 - Type 1 penalties (compliance breaches): Introduction

When calculating Type 1 penalties, the deciding officer must ask themselves four questions:

  1. Will the basis for calculating the penalty be ‘benefits gained’ or ‘scale charge’?
  2. Is the disclosure prompted or unprompted?
  3. Are the breaches categorised as carelessly breaching or knowingly breaching the Regulations?
  4. Was the business cooperative or uncooperative during HMRC’s enquiry?

The officer must also consider when the breach occured to decide if it falls under MLR 2007 or MLR 2017.

In most compliance penalties, there will be individual circumstances where a business is in breach of both sets of Regulations (rather than one continuous breach).

For example:

Customer X made a transaction 20th June 2017 and CDD was not completed – 2007 Failure

Customer Y made a transaction 30th June 2017 and CDD was not completed – 2017 Failure

In this scenario, we can therefore sanction the business for both breaches and consider publishing details of the non-compliant (PDNC) for the relevant 2017 Regulatory breach.