Money laundering supervision: appeals and penalties
The penalties under Money Laundering Regulations and how to appeal against an HMRC decision.
HM Revenue and Customs (HMRC) may impose measures including a financial penalty if you don’t comply with the Money Laundering Regulations. In more serious cases it may consider criminal prosecution.
This guide tells you what you can do if you don’t agree with an HMRC decision. It explains how to ask for an HMRC review and how you can appeal to the tribunal. It also tells you about civil penalties and criminal offences under the Money Laundering Regulations.
What to do if you don’t agree with an HMRC decision
If HMRC makes a decision that you don’t agree with you may be able to challenge it.
You might want to challenge an HMRC decision if, for example it:
- refuses to register your business under the Money Laundering Regulations
- suspends or cancels your registration
- charges you a penalty for not complying with the regulations
- publishes a statement
- prohibits a person from managing
When HMRC tells you about a decision it’ll usually also offer you an opportunity to have the decision reviewed by an officer who wasn’t involved in making the original decision.
You can’t continue trading while a review is carried out if the decision was to refuse to register your business or to cancel your registration.
You can appeal to a tribunal if you’re not satisfied with the outcome of the review.
Penalties if you don’t comply with the Money Laundering Regulations
You’ll be protected from penalties and prosecution if you can demonstrate that you’ve followed HMRC’s Money Laundering Regulations guidance. However, HMRC can take various measures which range from warning letters to criminal prosecution if your business doesn’t comply with the regulations.
The aim of these measures is to encourage you to comply with the regulations. The action that HMRC takes will depend on the seriousness and potential impact of the failures identified.
You may have to pay a penalty to HMRC if you fail to comply with the regulations.
The penalty that HMRC imposes must be appropriate for the failure and at a level that:
- is proportionate to the failure
- dissuades non-compliance
The amount of the penalty will take account of the:
- reason for non-compliance
- seriousness of the offence
- compliance history of the business
- relative size of the business
- benefits received
- amount exposed to money laundering activities
To encourage compliance, HMRC will allow reductions to the penalty amount when you make an unprompted disclosure that you’ve breached the regulations. An unprompted disclosure means that you must contact HMRC before they contact you in respect of any type of enquiry or intervention.
You should make a disclosure to HMRC in writing. You’ll need to include an undertaking specifying how you intend to change this by becoming fully compliant with them.
Offences under the Proceeds of Crime Act and the Terrorism Act
If you don’t comply with the Money Laundering Regulations you could be committing offences under the:
- Proceeds of Crime Act 2002
- Terrorism Act 2000
You can get more detailed information about the criminal offences and penalties for money laundering and terrorist financing on anti-money laundering for:
Published: 25 February 2014
Updated: 26 June 2017
- This guidance has been updated to reflect legislation changes effective from 26 June 2017 including a link to further guidance on enforcement measures.
- First published.