Guidance

Penalties and appeals for money laundering supervision

Find out how to appeal against an HMRC decision and what the penalties are if you do not follow the rules.

HMRC may impose measures including a financial penalty if you do not 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 disgaree with an HMRC decision. It explains:

  • how to ask for a review
  • how to appeal to the tribunal
  • civil penalties and criminal offences under the Money Laundering Regulations

If you disagree with an HMRC decision

You might want to challenge an HMRC decision if, for example HMRC:

  • 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 they’ll usually offer you a review by an officer who was not involved in the original decision.

You cannot 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 disagree with the outcome of the review.

Penalties if you do not comply with the regulations

You’ll be protected from penalties and prosecution if you can show you’ve followed HMRC’s Money Laundering Regulations guidance. HMRC can take various measures from warning letters to criminal prosecution if your business does not comply with the regulations.

These measures are to encourage you to comply with the regulations. The action that HMRC takes depends 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

HMRC will allow reductions to the penalty when you make an unprompted disclosure that you’ve breached the regulations. An unprompted disclosure is when you contact HMRC before they contact you for any type of enquiry or intervention.

You should make a disclosure to HMRC in writing, which should include how you intend to become fully compliant.

Detailed information about the penalties for failing to comply with the Money Laundering Regulations can be found in the enforcement measures and MLR1 Penalties Manual.

Penalty administration charge

HMRC will introduce a penalty administration charge for all anti-money laundering supervision penalties issued from 25 July 2018. The charge is for costs of issuing penalties to businesses that do not comply with the Money Laundering Regulations.

Compliance penalties

HMRC will charge up to £1,500, as well as the penalty for breaches of the Money Laundering Regulations such as failures for:

  • customer due diligence
  • risk assessment
  • policies, controls and procedures
  • record keeping

All other penalties

HMRC will charge up to £350, as well as the penalty for failures to, for example:

  • register
  • tell HMRC of changes to your business
  • provide information

Proceeds of Crime Act and the Terrorism Act offences

If you do not 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
Last updated 30 July 2018 + show all updates
  1. The section about the Proceeds of Crime Act and the Terrorism Act offences has been updated.
  2. The section about the penalty administration charge has been added.
  3. This guidance has been updated to reflect legislation changes effective from 26 June 2017 including a link to further guidance on enforcement measures.
  4. First published.