Corporate report

HMRC economic crime supervision annual assessment report: 1 April 2022 to 31 March 2024

Published 11 September 2025

Foreword

I am pleased to introduce the third report on HMRC’s statutory supervision responsibilities under the Money Laundering Regulations (MLRs) 2017. HMRC committed to report on its supervision activity in the Economic crime plan 2019 to 2022 - GOV.UK. Whilst the Office for Professional Body Anti-Money Laundering Supervision (OPBAS) does not supervise HMRC, this report demonstrates, as appropriate, HMRC alignment to the standards outlined in the (OPBAS) Sourcebook across the 2022-24 reporting period. The OPBAS Sourcebook provides information for professional body supervisors on how to comply effectively with their obligations under the Regulations. HMRC and HM Treasury agreed to a 2-year reporting period to assess a wider evidence base for our performance and continuous improvement activity.

Independent internal assessors have found that HMRC supervision activity is aligned to the OPBAS standards, exceeding them in some instances by leveraging our unique capabilities and array of civil and criminal powers as the UK’s tax and customs authority and one of the public sector supervisors under the Regulations. 

Promoting

We are promoting adherence to the Regulations by building routes to compliance with our supervised businesses and working with them to get things right. We have engaged with industry groups on over 100 occasions during the reporting period alongside activity to work with our population directly, including through our webinar series that has reached thousands of attendees. 

Protecting

We are protecting the UK from harm through our supervised business register to make sure that only suitable businesses are registered. We maintain the integrity of our register through comprehensive checks and our staff and systems refused over 1,500 new or annual refresh applications in the reporting period for those that did not meet the standard. 

Responding

We are responding to those that have broken the rules using our broad range of enforcement tools. In the last 2 years we have issued over 1,700 penalties and closed over 50 businesses which posed unacceptable money laundering risks.

Staff and skill development

We value the efforts of our staff, equipping them with the tools and knowledge they need to combat economic crime and creating a culture that will make HMRC a great place to work. I congratulate those colleagues who have gained almost 300 HMRC-sponsored professional qualifications to develop their technical anti-money laundering expertise to the highest levels. 

Risk-based approach

All our work is underpinned by a risk-based approach and with keen awareness of finite resources which we strive to deploy to maximise value for the UK. We welcome opportunities for change while supporting external initiatives and the period ahead is an exciting one for HMRC. We have responded to the public consultation by HM Government on system-wide supervision reform and we look forward to contributing to the preparation for the UK’s mutual evaluation by the Financial Action Task Force (FATF). 

Money laundering and terrorist financing enables criminals and terrorists to profit and engage in some of the most damaging crimes and this represents a significant threat to the prosperity and security of the UK. I am proud of HMRC efforts to tackle this threat and look forward us continuing this work alongside our supervised sectors and law enforcement partners in the years ahead. 

Louise MacDonald 

Deputy Director Economic Crime, Fraud Investigation Service 

HM Revenue and Customs 

The supervision landscape

HMRC is one of the UK’s 25 anti-money laundering supervisors and one of the 3 statutory supervisors alongside the Financial Conduct Authority (FCA) and Gambling Commission.

HMRC delivers its responsibilities through dedicated supervision teams whose primary purpose is to help ensure that businesses in supervised sectors comply with the Regulations. These teams also check businesses have the correct and appropriate systems and processes in place to protect themselves and their services from being exploited for the purposes of money laundering and terrorist financing.

HMRC has responsibility for approximately 36,000 businesses operating from nearly 73,000 premises, across 9 different sectors:

• Accountancy Service Providers (ASPs)
• Art Market Participants (AMPs)
• Bill Payment Service Providers (BPSPs)
• Estate Agency Businesses (EABs)
• High Value Dealers (HVDs)
• IT and Digital Payment Service Providers (ITDPSPs)
• Letting Agency Businesses (LABs)
• Money Service Businesses (MSBs)
• Trust or Company Service Providers (TCSPs)

Further detail on who needs to be supervised by HMRC under the Regulations is available online.

Assessors’ statement and recommendations

This report was written by HMRC officers outside of the Supervision teams, and independent from the teams that were assessed. The Assessors conducted a range of research activity that was supported by HMRC supervision teams who provided information to the Assessors and participated in focus groups and individual interviews. The Assessors have spoken to teams across all supervision functions and visited multiple HMRC locations across the UK to gather evidence and information to inform their findings. Research activity took place between February and June 2024.

The Assessors have structured the report to detail HMRC work as a supervisor against the standards in the OPBAS Sourcebook, where those standards are appropriate to HMRC. Each standard is addressed in the subsequent chapters of this report.

The OPBAS Sourcebook contains guidance for the professional body supervisors (PBS) it oversees. HMRC is not supervised by OPBAS but is always seeking to ensure its approach to supervision is as effective as possible to protect the UK from the threat of money laundering and terrorist financing, in line with OPBAS and FATF expectations. As such, the Assessors have considered OPBAS examples of good practice and standards as a guide though they are not wholly applicable given HMRC’s unique role, responsibilities and capabilities as a government department and law enforcement agency. HMRC supervision activity extends beyond that of professional bodies to other sectors, and different oversight arrangements exist given HMRC’s statutory footing and its tax and customs functions.

OPBAS uses a 4-point scale to assess the effectiveness of PBS activity against its standards and its own annual report includes anonymous scores for PBS’ it has assessed. Given HMRC’s unique position as outlined above the Assessors did not apply the OPBAS scoring system, however based on their overall findings they view the department as being ‘Largely Effective’, demonstrating that it is achieving outcomes frequently and to large degree, although moderate improvements are needed in order to maximise effectiveness.

This publication’s 2-year reporting period from 2022-24 has enabled continuous improvement initiatives to be captured and measured more comprehensively than the previous annual cycles. The Assessors have included some recommended areas of focus below. The recommendations are largely thematic and cover multiple OPBAS standards. Given the cross-cutting nature of OPBAS Sourcebook chapters, the Assessors have sought to summarise recommendations in this section rather than repeating them throughout the report. They also include any outstanding recommendations from previous HMRC Self-Assessments into its supervision function. The Assessors believe this approach provides clarity and transparency, while not prejudicing HMRC’s ability to prevent or detect crime now or in the future.

The Assessors’ intention is that these recommendations provide supervision staff with a useful steer as HMRC seeks to refine its existing approach and that this report demonstrates, to stakeholders and the public, HMRC’s commitment and action to protect the UK from money laundering.

The Assessors are grateful to colleagues within the supervision teams for their assistance to support the research and drafting of this report and wish them well as they continue their mission to become an even more effective supervisor.

Wider systemic factors

The Assessors recognise the wider systemic factors that impact HMRC’s ability to deliver on its supervision function more effectively. In some cases, for example with legacy IT systems, there is an adverse impact on customer experience and satisfaction. While all challenges cannot be fully addressed independently HMRC is working hard to mitigate them, for example deploying automated solutions within current technological boundaries to reduce manual processes.

HMRC should maintain its understanding of the impact of these issues and potential mitigations, including activity already in place and how this might be measured, expanded, replicated or prioritised against business plans and resources. This effort should leave HMRC better placed to seize any opportunities for change.

Business planning

HMRC undertakes a wide range of work to deliver its supervision activity and has articulated this within its business planning cycle. However numerous plans and supporting documents are diluting the benefits of business planning, which should be to link different teams together, align staff to one narrative, effectively prioritise activity and manage change. Beyond accessibility and user-experience challenges associated with formatting there is a missed opportunity to demonstrate, in one place, the real successes and progress from previous years and to show how these are being built on with future activity with clear and measurable objectives. Some teams demonstrated good practice to help drive the business effectively including the impact of resource reductions, a distinction between business as usual and prioritised project activity and the use of celebratory performance infographics.

HMRC should use a consistent approach to business planning for supervision activity. Current arrangements lead to varying content, and reduced ability to see, assure and prioritise delivery.

Data

Data challenges were widely acknowledged across the supervision teams and some encouraging work has been undertaken within the reporting period to modernise and align some data processes. There is more to do in this area and the Assessors identified opportunities for improvement around data resourcing, collection and utilisation.

HMRC should address this through a holistic review to identify and agree data needs, expectations, processes and resourcing. This should assist HMRC in streamlining its approach to data and make data integral to all supervision activity to benefit performance assessment, decision making, project planning and continuous improvement.

Organisation structure

The funding model that HMRC must adhere to for its supervision functions presents a challenge to its resource planning and organisational structure. HMRC continues to work within the model by evolving and organising itself in a way that enables it to deliver its objectives. Major changes identified during the reporting period included different grading of front-line managers, reassignment of technical experts, trialling of a specialist risk-focused operational team and absorption of some functions into a new corporate centre. These decisions were taken for sound strategic and tactical reasons however they occurred at different times during the reporting period and without overarching change management, creating the appearance of a conflicting or misunderstood strategy and organisational structures.

HMRC should evaluate its current structure against these recent changes and its business objectives to give itself assurance that the current design is delivering for the business. Any evaluation should also consider how HMRC manages change and the provision of secretariat resources to support supervision activity.

Leadership, management and culture

Effective leadership and management are essential to achieving supervision objectives and continuous improvement. Research with operational front-line staff and reviews of staff survey data pointed to some exceptional examples of line management and leadership however inconsistencies in management activity, including performance management, were also observed.

HMRC should address such inconsistencies in its supervision functions in consultation with managers. Once known, any mitigating activity should be taken with a view to the HMRC professional standards, performance management policies and supervision business objectives for best practice. This exercise should also identify how managers would benefit from extra support. Delivering these outcomes would underpin activity to drive performance, champion change, nurture team culture and encourage professionalism across the business.

Learning and capability

HMRC is committed to enable its staff to deliver, offer a fulfilling career and contribute to its strategic objective to be a great place to work. Activity has been underway during the reporting period to progress activity in this area, principally the incremental roll out of both a new handbook to house all supervision guidance and learning frameworks across supervision functions.

Failure to achieve these objectives present a risk given their intended benefit to the business and the substantial resource and time commitments used so far. These projects are also being undertaken alongside activity to manage additional learning requests from the business and evaluate completed projects, the latter of which has reduced to minimal levels due to reprioritised resource.

HMRC should ensure the handbook and modular learning projects are delivered in 2024, alongside its wider plans to triage residual learning requests and evaluate any future learning activity for supervision. This should provide assurances that both key projects are on track, while prioritising the wider training offer to the benefit of supervision staff.

Consistency and quality in enforcement

HMRC has responded to internal feedback and recommendations from previous self-assessments to drive consistency and quality in its supervision enforcement activity during the reporting period. The Assessors were pleased to see initiatives such the roll out of new products to help compliance staff progress their investigations and guidance on the use of face to face and desk-based interventions. Other activity has included the dip sampling of cases to assure work, a review of the enforcement tools used by teams and reforms to the internal governance structures for the more complex or contentious cases. This range of activity, which ultimately has the same aim, is being undertaken in isolation and risks leading to sub-optimal outcomes despite best intentions.

HMRC should review initiatives in this area to ensure alignment, prioritisation, and performance management of different supervision workstreams. This needs to include the whole enforcement journey from caseworker decision to team leader approval and, where appropriate, the triage process and governance panel review. To increase understanding and buy-in from teams this needs to be visible nationally through regular communications and engagement. This should map the project journey, set out aspirations and highlight progress.

Governance

As a non-ministerial government department HMRC operates with governance arrangements that cover all its functions, including anti-money laundering supervision, tax and customs. Information about HMRC governance is available online.

HMRC is organised differently to the professional body supervisors that are the focus of the OPBAS Sourcebook. Some OPBAS standards are not applicable given HMRC is not private body or membership organisation like some other supervisors. Such standards include those concerning conflicts of interest, single points of contact and the separation of advocacy and regulatory functions.

Oversight and engagement within HMRC

HMRC supervision teams sit within its Customer Compliance Group (CCG) as part of the Fraud Investigation Service (FIS). FIS deploys a combination of civil and criminal investigations alongside specialist powers to tackle the most serious fraud risks, protect funding for UK public services and protect society from harm.

Senior level oversight

The Director of FIS and Chief Investigation Officer is accountable for HMRC supervision activity which is delegated to the Deputy Director for Economic Crime and their leadership team. Supervision activity and performance expectations are set through annual business planning and progress against these strategies is monitored through regular reporting and discussion of key trends, developments and management information. Senior leaders are supported by secretariats who facilitate and record decisions that underpin activity.

Senior officials are well engaged with this area, regularly representing HMRC and its supervision functions across government and with external stakeholders including Parliament and the supervised population.

Working level oversight

Supervision teams are organised across operational, policy and corporate functions and are co-located in HMRC regional centres across the UK. The structure is designed to promote collaboration between staff and is led by a senior management team comprised of all functions.

Working groups often oversee specific activity in more detail and present findings to senior management for discussion and conclusion. Current groups include Operations, Policy and Strategy, Change Control, Risk Assessment and Performance, Capability and Resourcing.

Resourcing

HMRC functions concerning tax and customs are funded through the budgetary framework set by HM Treasury and a Supply Estimate passed by Parliament each financial year. Full details of HMRC expenditure can be found online in its Annual Report and Accounts.

HMRC’s work as a public sector supervisor has a separate funding arrangement through a fee-based model. The Regulations allow HMRC to charge fees to applicants for registration and to the businesses being supervised, to meet any expenses HMRC reasonably incurs in providing supervision. Fees and charges are set and managed in accordance with HM Treasury guidance on Managing Public Money. Fees from supervised businesses are received throughout the year and annual fluctuations can arise for a number of reasons, including variations to income and HMRC costs. HMRC continues to work with HM Treasury and other public sector supervisors to explore how funding can be arranged and used to the best effect.

Supervision staff are deployed against multiple priorities and this challenge is managed through regular resourcing discussions which identify risks and mitigations, for example succession planning and year end staffing levels. Supervision staffing and recruitment practices follow HMRC policy and are consistent with the recruitment principles set out by the Civil Service Commission.

HMRC Supervision Fee Income (£) and Staffing Levels at Full Time Equivalent (FTE)

	2019-20	2020-21	2021-22	2022-23	2023-24
Fee Income (£)	£16,375,975	£22,764,868	£24,925,893	£26,808,359	£23,464,308[1]
Year End Staffing Levels (FTE)	265	298	343	397	419

[1] 2023-24 fee income adjusted by accounting recalculation.

A risk-based approach

A risk-based approach to anti-money laundering supervision

HMRC adopts a risk-based approach to focus resources and activity to achieve its objectives for anti-money laundering supervision. This approach is driven by policy and operational colleagues working alongside external partners including law enforcement agencies (LEAs), the other supervisors and industry stakeholders.

HMRC have risk assessments to identify and assess the international and domestic risks applicable to its 9 supervised sectors. Risk assessments are developed with consideration for the UK National Risk Assessment of Money Laundering and Terrorist Financing and equivalent documents from other countries and regions as appropriate. Consideration is given to reports from FATF and intelligence and information from LEAs and regulatory partners such as the National Crime Agency (NCA) or the Financial Conduct Authority (FCA). Risk assessments also consider additional information including media reporting.

Risk assessments are reviewed quarterly but are adjusted at any time when developments have an immediate impact on risk, for example the 2022 Russian invasion of Ukraine.

HMRC tests understanding of risk and identifies areas for collaboration and compliance through engagement with prominent supervised businesses and attendance of public and private sector forums.

In focus: addressing risk in Money Service Businesses (MSBs)

HMRC views Money Service Businesses as one of its highest risk sectors and this is highlighted in the National Risk Assessment 2020. While MSBs provide vital services to the community (including currency exchange, money transmission and cheque cashing) they can be exploited by criminals to launder the proceeds of crime, so must have a robust risk assessment and policies, controls and procedures to prevent this.

HMRC follows a risk-based approach to managing the MSB population and deploys its resources using a campaign approach that aligns with the overarching supervision business plans and the MSB Sector Strategy. HMRC also collaborates with the businesses themselves via the MSB Forum and externally with the other 2 public sector supervisors alongside UK LEAs.

In 2023, as part of work to address specific risks in the MSB sector, HMRC issued a penalty of £1.4m to Xpress Money Services Ltd for failing to carry out risk assessments, not having appropriate anti-money laundering controls, and failing to conduct proper due diligence checks. The business was also suspended from the supervised register and given time to put specific controls in place. When it failed to do so HMRC cancelled its registration and stopped it from trading.

Allocation of resources

HMRC uses the same risk-based approach to inform the allocation of supervision resources across operational activity, policy and enabling corporate functions.

Compliance activity is driven by risk assessments, primarily through specific ‘campaigns’ which set out the objectives for a programme of assessing compliance within particular a sector. Campaigns and standalone operational activity are also instigated using intelligence referrals, and random sampling of businesses from different risk profiles and sectors. This allows the testing of risking approaches and follow up interventions for those who have previously received a warning or penalty.

In focus: a risk-based approach to resourcing

Businesses within the HMRC supervised sectors have to be ‘Authorised’- that is to be registered for anti-money laundering supervision and make subsequent annual ‘refreshes’ where they declare their details are up to date and pay a supervision fee. The majority of HMRC supervised sectors fall under the ‘Approvals’ process for registration, where HMRC undertakes a series of checks that determine if an entity can be registered for supervision. Additionally, constituents of the MSB and TCSP sectors also require ‘Fit and Proper’ (F&P) testing given the higher risks involved with their activity.

A 2023 resourcing review of Approvals and F&P identified that teams were effectively ring-fenced to deal with specific sectors, creating different training requirements and restricting staff deployment against fluctuating priorities. A combined training programme was implemented to enable teams to work across all the supervised sectors and improve operational resilience.

The initial results of this approach have been positive, with a 27% reduction in Authorisations work on hand and an increase in staff capability and flexibility to deliver and focus efforts towards the higher risk sectors.

Supporting businesses to take a risk-based approach

HMRC is committed to supporting its supervised population to get things right and further information about this work is covered later in this report. See section: Information and Guidance for the Supervised Population.

In focus: reducing risks associated with high value transactions

HMRC is committed to helping supervised businesses to reduce their exposure to the risks associated with money laundering, terrorist financing and proliferation finance. One such risk concerns High Value Dealers (HVD), those businesses or sole traders that accept or make cash payments of €10,000 or more. During the reporting period it was established that a wholesaler had received over £15m in cash from their customers over 5 years, some of which met the transaction threshold for HVDs. HMRC officers took enforcement action and explained the money-laundering risks associated with large volumes of cash transactions to the business and the wholesaler decided to accept future high value payments by bank transfer only, cutting their HVD risk to zero.

Supervision

Designing a supervisory approach

HMRC manages its approach to anti-money laundering supervision through business plans that include key operational activity, corporate initiatives and performance expectations. Business plans are aligned to HMRC’s Values, Strategic Objectives and the HMRC Charter. They are designed to account for the resources and capabilities afforded to HMRC by the supervision funding model, service requirements within the Regulations and, critically, the risk assessments for the 9 supervised sectors. All individual plans are regularly monitored and are adapted to address emerging risks or other developments. As highlighted earlier in this report (see Assessors’ Statement), there is an opportunity to build on this work to optimise overarching prioritisation, change management and efficient delivery.

Supervisory tools

HMRC deploys a range of tools to deliver its objectives at all stages of supervision including registration and ongoing compliance. Application of these tools depends on case-specific circumstances including the risk profile of a supervised entity. Tools can include outreach work and guidance for sectors, questionnaires, dip sampling to test the approach and direct interaction with the supervised population through statutory requests for information or compliance visits.

On-site and virtual assessments

Compliance with the Regulations is assessed through Face-to-Face (F2F) visits and remote Desk-Based Interventions (DBIs).

Face-to-Face: (F2F)

An onsite review of business records, documents and information. These visits can also be unannounced depending on the circumstances of the case.

Desk-Based Interventions: (DBI)

A review of business records, documents and information by telephone call or written correspondence. This type of assessment is suitable when the work and risks can be addressed remotely, for example checking sales information relating to an online business.

The choice of approach is driven by risk, with the higher risk sectors and businesses usually warranting a F2F visit. Planning is supported by internal guidance and staff leverage their operational experience to assure their approach. Consideration is also given to operational realities, for example some F2F deployments will be dependent on support from other LEAs. HMRC can conduct follow-up F2Fs and DBIs if required. HMRC F2F visits increased at the onset of the reporting period as COVID-19 restrictions ceased. The number of interventions varies depending on the level of risk and the intensity of the review.

When a F2F or DBI concludes as non-compliant HMRC uses its range of enforcement powers which are outlined later in this report (see section: Enforcement).

HMRC Supervision Face to Face and Desk Based Interventions [1]

	2019-20	2020-21	2021-22	2022-23	2023-24
F2F	817	153	289	907	955
DBI	1,012	843	1,426	834	511
Total	1,829	996	1,715	1,741	1,466

[1] HMRC reports its overall supervision externally as ‘Interventions’ which across the reporting period were 3,279 (2022-23) and 3,629 (2023-24). These comprise total F2Fs and DBIs as outlined above, alongside PTP cases, certain enforcement activity (Trading Whilst Unregistered penalties) and communications aimed to drive engagement and prompt behavioural change. (see sections: Enforcement and Information and Guidance for the Supervised Population).

Gatekeeper role

HMRC requires its supervised population to be registered for anti-money laundering supervision and refresh their registration annually. The full list of HMRC registered businesses is regularly updated online.

HMRC requests information to progress an application, as required, including from businesses within higher risk sectors that are subject to additional ‘Fit and Proper’ checks. In addition, HMRC works closely with those PBSs with whom it shares AML responsibility to exchange data about businesses to mitigate potential abuse of perimeter supervision issues. HMRC access to the Police National Computer enables staff to conduct criminal record checks in addition to other systems that allow teams to obtain overseas criminal records data.

Applications that do not meet the requirements set out in the Regulations can be refused. These decisions can be automated through HMRC systems or taken manually by operational teams. Manual refusals are usually applied when staff assess that a business is not suitable to be registered for supervision, for example the failure of a criminal record check. Examples of automatic refusals include an application not meeting administrative criteria such as the non-payment of annual supervision fees.

HMRC Supervision Registration Applications

	2019-20	2020-21	2021-22	2022-23	2023-24
New Applications Approved	10,564	7,495	9,831	9,592	8,405
Refreshed Applications Approved [1]	no data	no data	no data	19,373	23,656
Total Approvals	10,564	7,495	9,831	28,965	32,061
Manual Refusals	229	328	377	439	601
Automatic Refusals	1,818	1,002	1,153	976	948
Total Refusals	2,047	1,330	1,530	1,415	1,549

[1] Not recorded before 2022-23.

Registration performance

HMRC is committed to becoming an even more effective supervisor and assesses performance regularly. The Regulations require HMRC to process a new registration application within 45 days, and this standard also applies to other public sector supervisors including the FCA.

Percentage target achieved in respect of 45-day rule

Tax year	Percentage
2019-20	58.73
2020-21	78.07
2021-22	70.71
2022-23	75.48
2023-24	83.20

HMRC recognises the challenges to determining new registration applications within 45 days given the operability of some legacy IT systems and the resourcing pressures that can occur with surges beyond anticipated levels. Depending on the application, additional time might also be needed for greater scrutiny including time to source further documentation.

HMRC continues to explore with partners whether current timeframes concerning registrations are a pragmatic requirement of the Regulations when considered with operational realities and a risk-based approach.

In focus: driving registrations performance

During the reporting period teams worked hard to drive registration performance. Workflow managers were resourced to enable daily prioritisation and horizon scanning for case teams and introduced a dedicated registrations mailbox for applicants to direct their queries, allowing us to identify common questions, improve customer experience and reduce duplication when replying to correspondence. Recurring peaks for annual refresh registrations were also identified which have been factored into resourcing plans.

This activity has yielded positive results so far with a year-on-year increase of applications registered within 45 days, culminating in 83% for 2023 to 2024.

Policing the perimeter (PTP)

HMRC works to identify businesses that are trading while unregistered with the aim to prevent this and, if appropriate, bring them onto the register for supervision or stop them engaging in relevant activity. Businesses found to be trading whilst unregistered may be subject to enforcement action which is further outlined in this report (see section: Enforcement). Following a restructuring during the reporting period supervision teams are the process of refreshing the PTP strategy to build on accomplishments in this area.

HMRC Supervision Policing the Perimeter Outcomes

	2019-20	2020-21	2021-22	2022-23	2023-24
Brought onto the Register	87	59	67	91	170
Penalties Issued [1]	0	2	23	40	2
Criminal Referrals [1]	0	5	6	5	3
Total	87	66	96	136	175

[1] Included in the overall ‘HMRC Supervision Enforcement Activity’ figures shown in a later report section: Enforcement.

In focus: helping businesses get things right

In 2023 HMRC officers attended a series of art fairs to build understanding of potential traders that might be classed as Art Market Participants (AMPs) under the Regulations. Further analysis justified HMRC intervention and staff contacted 120 traders to advise them of their obligations to be registered for anti-money laundering supervision.

This activity prompted 54 applications for registration, confirmation that 43 businesses were out of scope of the Regulations and ongoing investigation of the remaining 23 cases to ensure the integrity of the register and promote compliance with the regulations in this sector.

Information and intelligence sharing

HMRC maintains partnerships to deliver objectives across the 9 supervised sectors and to share best practice and technical expertise. Information and intelligence are actively shared through multiple fora and bilaterally with relevant stakeholders to enable and optimise operational activity and further understanding of relevant risks and threats.

These include:

Joint Money Laundering Intelligence Taskforce (JMLIT)

JMLIT is a partnership between law enforcement and the financial sector to exchange and analyse information relating to money laundering and wider economic threats. Other JMLIT attendees include over 40 financial institutions, the NCA, FCA and police.

Intelligence Sharing Expert Working Groups (ISEWGs)

These are sector-specific groups for the Legal and Accountancy professions designed to advance and improve intelligence and intelligence-related information sharing at the strategic and tactical levels. Other ISEWG attendees include other relevant professional body supervisors for that sector.

In focus: UK police forces and regional organised crime units (ROCUs)

HMRC officers embedded across the police and 9 ROCUs work in partnership with other LEAs to support their investigations and identify high quality intelligence for referral back to HMRC for both civil and criminal interventions.

A HMRC ROCU embed notified HMRC colleagues after the police executed a search warrant on the addresses of an MSB director. Supervision staff used the intelligence to inform compliance activity resulting in the suspension of the MSB’s registration for money laundering supervision which stopped its ability to trade pending further investigation.

International engagement

HMRC works with international partners to share expertise, develop capability, and enable operational activity. This includes multilateral engagement through the Five Eyes Intelligence Alliance and FATF in addition to bilateral work with country-specific supervisors and Financial Intelligence Units (FIUs). HMRC can leverage its network of Fiscal Crime Liaison Officers (FCLOs) to do so, with over 40 officers deployed overseas to facilitate collaboration with their host nation and region.

In focus: cementing global partnerships

In 2023 HMRC signed a Memorandum of Understanding (MoU) with Australian counterpart AUSTRAC as part of its commitment to tackle money laundering globally. The MoU will help both countries share information and intelligence in the fight against money laundering and terrorist financing.

This effort builds on a strong working relationship as 2 members of the Five Eyes International Supervisors Forum, which last met in 2023 to leverage collective knowledge and experience on risk modelling, educative channels and regulatory structures and tools.

Policies and procedures for information and intelligence sharing

HMRC maintains organisation-wide policies and procedures for the collection and sharing of the information it holds and the basis of these are detailed in the HMRC Privacy Notice. Activity is in accordance with data protection law, including the UK General Data Protection Regulation (UK GDPR) and the Data Protection Act (DPA) 2018. HMRC is a statutory body with statutory functions and in addition to obligations under data protection laws also has a duty of confidentiality as set out in the Commissioners for Revenue and Customs Act 2005.

HMRC only discloses information where legally allowed to do so and can share information with the police and other LEAs where it is necessary for the prevention, investigation, detection or prosecution of crime, and other regulatory authorities when it is necessary for the purposes of their regulatory functions.

Department-wide procedures cover the security controls, protections and behaviours required for creating, handling, and disposing of information. HMRC adheres to the HM Government Security Classification Policy and Guidance and all staff undertake regular mandatory training on data protection and information security.

Use of intelligence and information sharing platforms and gateways

HMRC regularly reviews the platforms and gateways from which it can share intelligence and information to monitor their efficiency, value for money and compatibility with statutory obligations. Operational teams are confident that existing arrangements are suitable.

HMRC Supervision Intelligence and Information Sharing Activity

	2021-22[1]	2021-22	2022-23	2022-23	2023-24	2023-24
	Received	Issued	Received	Issued	Received	Issued
Information requests	1,234	59	1,168	359	1,455	373
Intelligence reports	695	18	913	19	995	64

[1] Not recorded before 2021-22.

Suspicious activity reports (SARs)

SARs alert law enforcement to potential instances of money laundering or terrorist financing and can be submitted by anyone who suspects non-compliance. The SARs regime and reporting system is owned and operated by the UK Financial Intelligence Unit (UKFIU) hosted by the NCA.

During the reporting period supervision staff contributed to HMRC-wide work on SARs. This included the appointment of a trained Money Laundering Nominated Officer (MLNO) and deputy in early 2024 to coordinate and ensure high quality SARs activity across the department. This effort will continue in the year ahead.

HMRC supervision staff submit SARs and receive training and guidance to understand the process and reasoning for making such a report. HMRC continues to work with NCA to build staff capability, understand behaviours within the supervised population and gain advantage from the SARs regime.

Disclosures (Whistleblowing)

HMRC publishes guidance for members of the public and businesses wishing to report suspicious activity via telephone or online. This type of reporting is known as Human Intelligence (HUMINT) and is a valuable source of information for HMRC.

All HMRC staff are trained on how to recognise, handle and report HUMINT and the department has a dedicated team to triage submissions and make sure they are treated appropriately. HMRC keeps information of this nature private and confidential.

Information and guidance for the supervised population

HMRC is committed to supporting supervised sectors to get things right by providing effective information and guidance.

The principal public information products are risk narratives derived from internal HMRC sector-specific risk assessments in addition to ad-hoc alerts containing information and guidance that might impact supervised businesses. This can include information to the supervised population on developing their own risk assessments, the need to be registered or refresh their registration annually. GOV.UK and email are the best methods to share this information on given their accessibility, speed of delivery and reach.

HMRC Supervision GOV.UK Activity

GOV.UK Web Traffic	2019-20	2020-21	2021-22	2022-23	2023-24
GOV.UK Guidance page views	485,428	359,869	392,035	316,428	311,218
GOV.UK Publications page views	88,349	65,239	55,019	61,728	53,650
GOV.UK Manuals views	4,958	2,775	1,219	1,784	1,629
GOV.UK Topics views	55,926	44,632	47,784	41,380	27,357
GOV.UK PDNC Page Views [1]	no data	no data	no data	5,187	8,989
GOV.UK SBR Page Views [2]	no data	no data	no data	47,824	50,315
Total GOV.UK page views	634,661	472,515	496,057	474,331	453,158

[1] Not recorded before 2022-23. Further information on PDNC (Publishing Details of the Non-Compliant) is covered in a later report section: Enforcement.

[2] Not recorded before 2022-23. Further information on SBR (Supervised Business Register) is covered in an earlier report section: Supervision.

HMRC Supervision Email Activity

2019-20

	Emails issued	Number sent
Bespoke [2]	17	115,619
Welcome	23	12,051
Renewal Reminder	35	33,584
Total	75	161,254

[2] Bespoke emails include information and guidance, alerts and webinar notifications for the supervised sectors.

2020-21

	Emails issued	Number sent
Bespoke [2]	22	338,972
Welcome	10	4,534
Renewal Reminder	40	38,048
Total	72	381,554

2021-22

	Emails issued	Number sent
Bespoke [2]	95	455,633
Welcome	22	5,622
Renewal Reminder	49	44,587
Total	166	505,842

2022-23

	Emails issued	Number sent
Bespoke [2]	72	928,540
Welcome	48	4,272
Renewal Reminder	24	52,184
Total	144	984,996

2023-24

	Emails issued	Number sent
Bespoke [2]	60	783,141
Welcome	40	3,605
Renewal Reminder	25	58,856
Total	125	845,602

An active work programme complements and contextualises online guidance, including through mailings and provision of guidance for articles written by relevant trade press. Live and re-watchable webinar series offer businesses the chance to understand a range of issues and best practice.

The communications approach is based on feedback from the supervised sectors and during 2023 and 2024 there was an increased programme of webinars, including a trial offering shorter sessions focusing on specific topics for the audience. For example, HMRC developed a 3-part webinar on how to create a risk assessment, as applicants are required to confirm they have their own tailored risk assessments in place before their entry onto the Supervised Business Register.

HMRC Supervision Webinar Activity

	2019-20	2020-21	2021-22	2022-23	2023-24
Number delivered	3	2	4	1 [1]	13
Number attended	431	1,173	911	9	5,973
Average Customer Satisfaction score [2]	no data	no data	72%	100%	77.98%
Recordings Accessed [3]	5,869	7,087	1,991	4,090	2,846

[1] This webinar was designed for businesses not yet registered for supervision, with the audience accessing the recording after the webinar took place.

[2] Not recorded before 2021-22.

[3] This includes viewing figures for webinars recorded in previous years.

In addition to webinars videos on YouTube are provided for supervised businesses. These videos provide a range of guidance and have so far received over 37,000 views. Eight videos were launched in the first year, and additional videos are added when insight shows there’s a task that requires simplification or additional support.

HMRC Supervision YouTube Activity

	2022-23	2023-24
Videos	8	2

HMRC regularly engages with supervised sectors through trade bodies, representative groups and directly with major operators to capture feedback and facilitate common awareness and adherence to the Regulations. During the reporting period a more interactive programme of engagement has been developed, focused on the findings from behavioural insight work, which has identified more opportunities to engage with supervised sectors and persons.

HMRC Supervision Engagement Activity by Sector [1]

	2019-20	2020-21	2021-22	2022-23[2]	2023-24
AMP	1	9	8	4	25
ASP	0	0	2	0	16
EAB	7	0	0	3	12
HVD	no data	1	1	0	7
LAB	no data	no data	no data	2	6
MSB	no data	no data	1	1	23
TCSP	no data	no data	no data	0	29
Total	8	10	12	10	118

[1] Bill Payment Service Providers (BPSPs) and IT and Digital Payment Service Providers (ITDPSPs) are not sectors that require tailored engagement activity due to their structure and risk profile.

[2] A new cross-sector recording process was introduced in 2022-23.

In focus: reaching out to inform supervised sectors

HMRC explores different communication methods to inform and guide the supervised population to compliance. HMRC uses its Linkedin profile to deliver regular updates on its activity, with per post impressions over 5,000 being viewed as strong engagement.

During the reporting period Linkedin posts concerning Art Market Participants and Estate Agency Businesses achieved impressions of 18,000 and 30,000 respectively, demonstrating good reach into the sectors. One post by a senior HMRC official also prompted a request from a professional organisation to collaborate and promote the need to register with HMRC for anti-money laundering supervision amongst their membership.

Supervised businesses requiring guidance are also welcome to contact HMRC through the dedicated inbox MLRCIT@hmrc.gov.uk The reduction of emails received during the reporting period is an indication of the effectiveness of online guidance and outreach activity by supervision staff.

HMRC Supervision Inbox Activity

	2019-20	2020-21	2021-22	2022-23	2023-24
Emails Triaged	17,687	15,325	14,786	17,925	15,954

In focus: using varied channels to guide the supervised sectors

During the reporting period, HMRC produced 10 YouTube videos for the supervised population, which have been viewed over 37,000 times. The videos provide a short interaction for customers to focus on a specific task. This has included a range of topics, including how to use the registration system, whistleblowing, and training staff to comply with the Regulations.

A GOV.UK digital assistant was also launched in 2023 to support customers to find the information they need as quickly as possible. The digital assistant answered 2,772 requests from July 2023 to March 2024. This has reduced the demand on the customer support inbox and enabled customers to self-serve wherever possible.

HMRC regularly reviews public guidance to ensure it is up to date with the Regulations and works closely with other supervisors to ensure alignment where necessary.

Staff competence and training

HMRC wants to be a great place to work and its learning offer for supervision staff continues to evolve and respond to new risk areas, feedback, and requests for support from teams. As noted earlier (see section: Assessors’ Statement) there is ongoing time-critical activity to consolidate all learning into structured and assured frameworks, and the effectiveness of learning initiatives should be evaluated to make sure colleagues have the right skills and capabilities to contribute to supervision objectives.

Training

Supervision staff go through learning pathways and undertake training at several stages. The initial stage contains mandatory learning for all civil servants and employees of HMRC. This includes modules on the Civil Service code, HMRC Charter, Health and Safety and Security and Data Protection. Additional training is also available to colleagues with specific responsibilities, for example HMRC’s Management Development Programme for line managers.

All supervision staff are given foundational training including an overview of the threats, the sectors supervised and the need for a risk-based approach. During the reporting period 169 staff were taken through this training. All programmes are being tailored to changing needs and work is underway to assure them against the HMRC Compliance Professional Standards.

This training offer is designed in consultation with staff, for example where they identify a requirement for their team or an area that requires more focus. When such training is judged as an ongoing requirement it is integrated into the learning pathways or maintained as a separate opportunity.

In focus: seizing external training opportunities

In 2023 HMRC invited colleagues from the UK’s Financial Intelligence Unit (UKFIU) to deliver a training programme on Suspicious Activity Reports (SARs). The UKFIU also provided further offsite training for a network of 11 single point of contact volunteers who now sign-off SARs submissions and advise on best practice for supervision teams.

External counsel were also invited to deliver enhanced evidential drafting training to operational staff. This pilot was well-received and continues with the support of HMRC’s in-house legal service, alongside specific courtroom training, to equip staff to engage with the justice system.

Continuous learning

HMRC has processes and support in place to enable staff to take control of their learning and development, giving them ease of access to the knowledge, skills and experience they need to unlock their full potential, share expertise with colleagues and follow rewarding career paths. Progress on this activity is evaluated through engagement with teams and listening to staff through the annual Civil Service People Survey.

In addition to the HMRC-wide accelerated development programmes staff have the opportunity to study formal qualifications up to diploma level to strengthen their expertise. During the reporting period 263 professional qualifications on anti-money laundering were completed by HMRC supervision staff.

Guidance for staff

Staff are supported through a wide range of policies, guidance and procedures including a handbook and Standard Working Instructions (SWIs). These products are put in place to enhance staff understanding of the Regulations and enable a consistent approach to anti-money laundering supervision, including a proportionate application of the Regulations.

A project is continuing beyond the reporting period to centralise guidance with the aim of streamlining the update process, filling gaps, increasing accessibility and reducing duplication.

Enforcement

HMRC aims to secure the highest level of compliance with the Regulations and leverages a wide range of powers and sanctions with the supervised population. When relevant persons have failed to meet their anti-money laundering obligations it is HMRC policy to deal with such breaches by the most appropriate route. HMRC has a strong toolkit of civil sanctions which can be deployed in most instances but can and does also use criminal investigation if warranted.

Supervision staff use investigative and information gathering powers granted by Regulation 66 of the Regulations. This enables HMRC to mandate the production of documents or the provision of information and to interview the supervised population. Most requests for information do not progress to a formal Regulation 66 Notice however during the reporting period additional formal notices were made as part of the MSB Sector Strategy. Failure to comply with a formal notice will lead to further enforcement action.

HMRC Supervision Regulation 66 Activity

	2019-20	2020-21	2021-22	2022-23	2023-24
Notices issued	23	1	16	510	504 [1]

[1] 2023-24 figures include Regulation 66 notices concerning applications for anti-money laundering supervision.

The enforcement toolkit

HMRC has a broad range of enforcement tools designed to remove the benefits of non-compliance, promote behavioural change, and deter future breaches in a way that is appropriate and effective. These methods are used concurrently or sequentially depending on the circumstances of a case and are published online in circumstances outlined by the Regulations.

Warning Letter

A warning letter may be appropriate for minor breaches of the Regulations that did not lead to an increased risk of money laundering or terrorist financing.

Prohibition of Management

Regulation 78 of the Regulations permits HMRC to impose a prohibition on management on a person who was at the material time an officer (as defined in Regulation 3) of the business and was knowingly concerned in a contravention of a relevant requirement by that business. A prohibition on management can be, depending on the nature of the risk posed by the officer if they were to continue in that position, temporary or permanent.

Suspension

Suspension is the temporary removal from HMRC’s register of supervised businesses. This effectively means that the business cannot lawfully engage in the activity they are supervised for under the Regulations. This is a significant sanction applied for the time necessary for the business to address non-compliance and satisfy HMRC that it has done so.

Cancellation

Cancellation is the permanent removal of the business from HMRC’s register of supervised businesses. Also known as a statutory cancellation, this prevents the business from legally trading in the activity they are supervised for under the Regulations. This is a severe sanction used in the most serious cases and can follow a suspension or be immediate depending on the circumstances of a case. Registration can also be cancelled when a business does not pay its annual fees or financial penalties under the Regulations after a series of reminders.

Financial Penalty

Financial penalties are calculated on a case-by-case basis through a penalties framework with consideration for a range of factors including the supervised sector and type of breach. Penalties are usually applied to a business but where it can be shown that an officer of the business was knowingly concerned in non-compliance a penalty can be applied to that individual personally.

Censure

Censure is a formal public statement of disapproval, identifying the business and the non-compliance. These can inform the public of HMRC’s efforts to combat money laundering in addition to driving compliance within the supervised sectors by acting as a learning tool and deterring others from non-compliance. HMRC has not used this method of enforcement however is actively exploring opportunities to issue censuring statements in the year ahead.

Criminal Referral

HMRC reserves complete discretion to conduct a criminal investigation for cases where we want to send a strong deterrent message or where the conduct involved is such that only a criminal sanction is appropriate. The HMRC criminal investigation policy explains how we will identify and conduct a criminal investigation. HMRC is not responsible for deciding if a case will be criminally prosecuted. This decision is made by an independent prosecuting authority, either the Crown Prosecution Service for England and Wales, the Crown Office and Procurator Fiscal Service for Scotland or the Public Prosecution Service Northern Ireland. An example of economic crime supervision activity leading to a criminal outcome is included below (see In focus: communicating enforcement to supervised sectors).

In focus: enforcement within the TCSP sector

After acknowledging external criticism of HMRC supervision of the TCSP sector, a sector assessed to be high risk, an internal review identified opportunities to enable more effective TCSP supervision. Activity was progressed to leverage the broad enforcement toolkit and a project was undertaken to progress this objective both within and beyond the reporting period.

This effort has already yielded significant results, with an increase from 5 penalties issued in 2022-23 totalling £31,065, to 28 in 2023-24 totalling £272,430. Additionally, operational staff have also delivered the first use of a suspension, first cancellation and first fit and proper removal in the TCSP sector. Future activity is planned to raise awareness these types of sanctions with the supervised population and measure their impact.

HMRC Supervision Enforcement Activity

	2019-20	2020-21	2021-22	2022-23	2023-24
Warning Letter	406	162	511	442	573
Prohibition on Management	1	0	3	0	0
Suspension	3	14	4	2	7
Cancellation [1]	89	54	4	27	29
Penalty	31	41	283	770	978
Censure	0	0	0	0	0
Criminal Referral [2]	5	17	41	30	47

[1] Parameters for cancellation can change annually.

[2] Cases are referred to HMRC criminal investigation teams that decide on case adoption.

HMRC Supervision Penalty Figures

	2019-20	2020-21	2021-22	2022-23	2023-24
Penalty Count	31	41	283	770	977
Penalty Value	£9,066,033	£32,810,612	£2,502,415	£5,539,214	£5,318,077
Revised Penalty Value [1]	£1,911,227	£3,078,182	£2,502,415	£5,539,214	£5,318,077
Average Penalty [2]	£61,652	£75,078	£8,842	£7,194	£5,525

[1] Revised figures have been created to display all previous year’s figures, reflective of the update to the penalty framework enacted in 2021.

HMRC Supervision Penalty Count and Value by Sector [1][2]

2019-20

	Penalty count	Penalty value (£)
AMP	no data	no data
ASP	16	£9,408
BPSP	0	£0
EAB	2	£1,072,010
HVD	3	£77,678
ITDPSP	0	£0
LAB	no data	no data
MSB	2	£1,072,010
TCSP	8	£72,282
Total [3]	31	£1,911,227

[1] AMPs and LABs did not fall under HMRC supervision until January 2020. 

[2] Average penalty figure is calculated using the revised figures and rounded to the nearest whole number.

[3] Penalty values for 20-19 and 2020-21 have been amended to reflect revised penalty values from the updated penalty framework.

2020-21

	Penalty count	Penalty value (£)
AMP	no data	no data
ASP	7	£40,468
BPSP	0	£0
EAB	20	£71,531
HVD	2	£117,171
ITDPSPs	0	£0
LAB	no data	no data
MSB	12	£2,849,012
TCSP	0	£0
Total	41	£3,078,182

2021-22

	Penalty count	Penalty value (£)
AMP	1	£750
ASP	136	£482,350
BPSP	0	£0
EAB	132	£772,618
HVD	2	£36,100
ITDPSPs	0	£0
LAB	0	£0
MSB	7	£1,172,200
TCSP	5	£38,397
Total	283	£2,502,415

2022-23

	Penalty count	Penalty value (£)
AMP	47	£265,500
ASP	313	£1,226,891
BPSP	0	£0
EAB	391	£2,178,564
HVD	9	£54,900
ITDPSPs	0	£0
LAB	1	£1,000
MSB	4	£1,781,294
TCSP	5	£31,065
Total	770	£5,539,214

2023-24

	Penalty count	Penalty value (£)
AMP	91	£389,037
ASP	287	£1,079,184
BPSP	0	£0
EAB	551	£3,255,883
HVD	15	£309,241
ITDPSPs	0	£0
LAB	0	£0
MSB	6	£12,302
TCSP	27	£272,430
Total	977	£5,318,077

Assuring enforcement

Use of enforcement tools is guided by policies and procedures to ensure that the supervised population is treated fairly and consistently. Staff are trained to assess the appropriateness and proportionality of sanctions on a case-by-case basis and are subject to peer review before issuing any decision. As outlined earlier (see section: Assessors’ Statement), ongoing and planned activity to ensure a consistent approach should be progressed through a system wide review.

Staff use case management systems to record all correspondence and casework throughout the lifecycle of a case which can be used for quality assurance and training purposes. More information on quality assurance can be found later in this report (see section: Record Keeping and Quality Assurance).

Communicating enforcement

HMRC values the benefits that can be gained from communicating enforcement activity, including the strong deterrence message for the supervised population and the opportunity to demonstrate to those engaged in non-compliance that nobody is beyond HMRC’s reach.

It is also important to show the public how HMRC is delivering its vision to be a trusted, modern government department that is making it hard to bend or break the rules, whilst supporting wider government economic aims and protecting society from harm.

HMRC regularly publishes its penalties on GOV.UK as well as regular press releases and notices on enforcement that are covered in national and trade media. Further detail can be found earlier in this report (see section: Information and Guidance for the Supervised Population).

In focus: communicating enforcement to supervised sectors

During the reporting period staff undertook a package of enforcement activity against estate agents breaching the Regulations. HMRC named over 68 businesses for not complying with the Regulations, issued over £500,000 in fines and secured the first ever prosecution of an estate agent for solely trading whilst unregistered for supervision. The conviction led to a sentence of 120 hours community service and banned the individual from trading for 2 years.

This news was disseminated to the sector through a press notice, which was picked up across property trade media including Estate Agent Today, Landlord Knowledge and Property Industry Eye. HMRC recorded strong impacts from this activity including a 10-fold increase in average monthly gov.uk guidance views, a monthly record of 539 new EAB applications for registration and a 50% increase in other businesses registering for the next 3 months.

Record keeping and quality assurance

Effective record keeping is essential to show how and why decisions have been made. Supervision staff utilise a Decision and Evidence Log (DEL) during the lifecycle of any investigation to record case developments, correspondence and guide decision making on outcomes such as a warning letter or penalty. Decisions made by officers are subject to manager approval at multiple stages of an investigation.

This information is readily accessible on the HMRC central case management system and can be used to inform future activity across all the department’s functions, for example investigations into tax compliance. All records are kept in line with HMRC’s data protection and statutory obligations.

Quality assurance (QA) testing

A dedicated assurance capability exists to supports supervision teams to work to the high standard expected of HMRC officers. When general areas for improvement are identified an assurance panel chaired by a senior manager determines mitigations which are communicated and tracked within the affected teams.

Case-specific assurance is the responsibility of operational managers who sign-off activity at different stages of an investigation. When an officer determines that a particular level of penalty is due it will be referred to a governance panel, where a board of senior managers including HMRC solicitors assess whether the proposed sanctions are appropriate as defined by the Regulations.

During the reporting period HMRC undertook a programme of QA including looking at its aged cases position, rationalising guidance for staff and dip sampling of DEL quality and case management system entries. Supervision staff are in the process of refreshing their QA plan to prioritise areas of focus for the year ahead.

In focus: reducing aged cases

A 2023 review identified opportunities to improve the management of aged cases, those investigations that have not progressed beyond a reasonable timescale. Assurance staff introduced a new process with operational teams, setting triggers for escalation based on case length alongside performance expectations tailored each type of case.

The new approach has had a positive impact, with one operational team recording an aged case reduction of almost 65% and an overall year on year reduction of 6% across all operational teams, alongside enhanced staff awareness and a new data tool to track the progress of future aged cases.