ECSH101000 - Publishing Details of the Non-compliant: Guidance
Regulation 85 of The Money Laundering, Terrorist Financing and Transfer of Funds (Information on the Payer) Regulations 2017 (MLR 2017) requires HMRC to publish on our website details of those sanctioned for failing to comply with MLR 2017. The publication must include information about the ‘type’ and ‘nature’ of the breach, and the identity of the person on who the sanction or measure is imposed. This includes the business name, address, sector, regulation breach, penalty amount and the appeal status.
Unless exceptions apply, HMRC can publish details of the sanction:
In full.
Anonymously.
At a deferred date when it is considered the exceptions no longer apply.
The decision maker (DM) needs to record the reasons and evidence used to support the sanction, and full or anonymous publication of such sanction. The DM must consider if there is a strong public interest in disclosing penalties beyond what is published in the publishing details of the non-compliant (PDNC). If so, the DM may decide to issue a censure statement See ECSH84000. This decision must be recorded in the Decision and Evidence log (DEL).
The DM must make the following considerations when publishing the details of any sanction. This is in addition to the circumstances listed in ECSH100500.
Ongoing investigation
HMRC cannot publish any penalty if it were to jeopardise the status of an ongoing investigation.
(This content has been withheld because of exemptions in the Freedom of Information Act 2000)Stability of financial markets
A financial market is where financial securities (stocks and bonds) and commodities (precious metals and agricultural products) are traded at prices in response to supply and demand. Markets can be physical in nature (e.g. London Stock Exchange) or electronic. Both facilitate the exchange of securities/commodities between buyers and sellers.
Movements in the stock market can have an impact on economic stability. For example, a collapse in the share price of a large corporation can contribute to this level of disruption.
Publication of addresses
The DM needs to decide if it is reasonable to publish the address of the business or individual subject to sanctions. If there is evidence in the public domain that the address and entity in question are linked, such as on Companies House, it is reasonable to use this address in PDNC release.
If the address is a strictly personal address (for example, private residential address), the DM should decide whether it would be disproportionate to publish the full address. The DM could decide to publish the village/town/city without the specific address, if this is proportionate. This decision must be recorded in the DEL.
Voluntary disclosure
Voluntary disclosures are where supervised businesses inform HMRC of a breach of MLR 2017 without any prompting or intervention by HMRC.
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- (This content has been withheld because of exemptions in the Freedom of Information Act 2000)
- (This content has been withheld because of exemptions in the Freedom of Information Act 2000)
Where businesses make proactive voluntary disclosures leading to reduction in penalties, such details should be noted on the PDNC publication.
Health circumstances
Anonymous publication may be appropriate where all the below apply:
A Beneficial Owner, Officer or Manager (BOOM) experienced serious mental and/or physical health issues that contributed to the non-compliance which led to the sanction.
There is strong evidence submitted by the business of the BOOM’s detrimental mental and/or physical health circumstances in the same timeframe as the non-compliance in question.
The risks could not have been mitigated by another BOOM or BOOMs in the business. I.e. the BOOM in question was the single point of failure leading to the non-compliance.
Consideration of proportionality
Proportionality is a general principle used to be fair and just. There is no description of what proportionality means MLR 2017. HMRC will consider the issue of proportionality on a case-by-case basis.
When determining the actual penalty imposed, proportionality is considered to determine the correct balance between the restriction imposed by the corrective measure and the severity/nature of the offence. In other words, the sanction imposed should be proportionate to the underlying breach(es). The facts determining the appropriate sanctions outcome are also relevant to the publication decision, alongside any representations made by the business.
Negative effect on the financial viability of the business, or loss of custom is generally not considered disproportionate and is to be expected. The evidence supplied must be weighed against the factors that gave rise to the penalty. For example, if the business deliberately failed to comply, it would have a far higher bar to demonstrate that publication would be disproportionate, because publication serves as a deterrent to businesses across all supervised sectors (not just the business in question).
MLR 2017 allows for penalties to be charged on individuals and connected persons in addition to, or instead of the business. When a sanction is imposed on an individual, the proportionality of publication should be carefully considered. Personal safety should always be taken seriously, as should any effect on a person’s physical or mental health. Where it is considered that publication of the details of an individual (“an identified or identifiable living individual”) would be disproportionate, the details should be published anonymously.
All cases must be considered on a case-by-case basis. If the DM decides that publication would cause disproportionate damage to a business or individual, they should consider deferring publication in line with Regulation 85(4)(a) and (b) MLR 2017. The DM must consider the circumstances when publishing the details would be appropriate. If it seems unlikely these would apply, the DM should consider and pursue anonymous publication. In making this decision, consult the relevant Strategy Lead, Senior Officer manager and business unit head.
Representations
If a business makes representations against the full publication of the sanction, the DM will review and respond to these using this guidance, and ECSH100500. The DM must record their rationale on the DEL.