ECSH81075 - Sanctions for non-compliance: sanctions framework: determining an appropriate sanction

Before determining an appropriate sanction 

Before determining an appropriate sanction(s), the decision maker (DM) must have one or more of the following: 

  • Identified a contravention of one of the relevant requirements listed within Schedule 6 of The Money Laundering, Terrorist Financing and Transfer of Funds (Information on the Payer) Regulations 2017 (MLR 2017) and have evidence of the contravention,   

  • Have evidence that the conditions within regulation 59(1) MLR 2017 are met. 

  • Have evidence that a business or beneficial owner, officer or manager of that business is not fit and proper. 

The evidence to support each contravention of MLR 2017, should include: 

  • How the contravention happened. 

  • Who was responsible for the contravention (that is, employee, director, business). 

  • How long the contravention(s) has/have been going on. 

  • Considered the money laundering/terrorist financing/proliferation financing risks the business poses. 

  • Confirmed that they are satisfied the relevant business has failed to take all reasonable steps and failed to exercise all due diligence to comply see ECSH82525. 

  • Considered whether the business has followed the relevant HM Treasury approved guidance and any other guidance that HMRC has made available. 

If the DM does not have this information, it is unlikely that they will be able to progress with a sanction. 

Determining an appropriate sanction(s) 

When determining an appropriate sanction(s), the DM needs to consider the following: 

  • Will the sanction be civil or a criminal referral? Contraventions of MLR 2017 can be treated as a civil or criminal matter. Before taking a civil sanction, the DM needs to decide whether a criminal referral is appropriate, by following the guidance in ECSH85000. 

  • Who is being sanctioned? This could be an individual, relevant business or both. 

  • What duration of sanction(s) is required? 

  • The duration of sanction would depend on the non-compliance and risk which needs to be addressed. Sanction durations can be immediate; one-off; short-term; long term; or permanent. 

  • What is the most appropriate sanction(s) to address the non-compliance and risk(s)? 

  • The DM needs to arrive at an appropriate sanction(s) which addresses the non-compliance and/or risk(s) based on the facts and circumstances of each case and is effective, persuasive and proportionate. 

  • When deciding whether to impose a financial penalty and/or any other sanction, decision-makers (DM) must take into account all relevant factors including, where appropriate, those in regulation 83(1) MLR 2017, for more information see ECSH85625. 

  • Although regulation 83(1) MLR 2017 does not apply to all sanctions, it is good practice to consider these factors when deciding on a sanction(s). 

Other considerations such as: 

  • Reputational risks, if we do or don’t take the sanction(s) being considered. 

  • Impact on the business and its employees. 

  • The sanction may not result in behaviour change. 

  • The sanction is appropriate in the circumstances of the case. Meaning whether it is effective, proportionate and dissuasive. 

Further guidance to illustrate the range of possible sanctions can be found at the end of this section under ECSH81125.