ECSH81080 - Sanction administration charges

Regulation 102 of The Money Laundering, Terrorist Financing and Transfer of Funds (Information on the Payer) Regulations 2017 (MLR 2017) allows a supervisor to impose charges to meet any reasonable expenses incurred by them in carrying out their functions under the regulations. This allows HMRC, as an MLR supervisor, to recover these expenses. HMRC recovers the vast majority of these expenses through the supervisory fees it charges to supervised businesses. However, HMRC incurs additional costs in addressing non-compliance by businesses. These costs should not be borne by the supervised population as a whole, so an additional charge is passed on to non-compliant businesses, reflecting the additional costs of sanctions. This is known as the sanction administration charge (SAC). 

 

Introduction of administration charges by Economic Crime- Supervision (EC-S) 

EC-S introduced the penalty administration charge in July 2018. It was an additional amount charged to a non-compliant business when a financial penalty was imposed. It was intended to make sure those businesses who are compliant do not pay for the cost of HMRC’s supervision of the non-compliant, by linking the charge to the imposition of civil penalties on non-compliant businesses. The amount of the penalty admin charge was calculated with reference to the cost of staff resource involved in processing penalties.

SAC was introduced by EC-S on 1 December 2025 and replaces the previous penalty administration charge regime. The SAC represents the amount of staff resource involved in processing a sanction and is applied to the following sanction types-

  • Financial penalties
  • Suspension of registration
  • Cancellation of registration
  • Prohibitions on management
  • Censure statements
  • Injunctions

Details of the SAC for each type of sanction can be found here. 

SAC caps on financial penalties

The SAC is capped for financial penalties, which is intended to keep the SAC reasonable and proportionate to the amount of the penalty. A SAC cannot exceed the amount of the penalty being imposed. As an example, the SAC for a type 1 penalty is £2,000, so a type 1 penalty of £500 would have a SAC capped at £500. 

Considerations when applying a SAC

  • The penalty early payment reduction only applies to the associated financial penalty and the calculation does not take into account the SAC (which should be paid in full). 

  • A SAC is not appealable. However, if a financial penalty was reduced as a result of successful challenge, including statutory review and/or appeal, the SAC should be reduced to reflect the revised cap, as necessary. If another sanction type was cancelled, as a result of a successful challenge, then the SAC would also be cancelled.

  • A SAC is applied when a sanction is being charged. However, if multiple sanction types are being charged for the same business, this will affect how the SAC is applied. Please refer to ECSH81085 for further guidance.

  • A SAC will not apply to any case, where a sanction notice is issued to a business before 1st December 2025.