ECSH82575 - Sanctions for non-compliance: financial penalties: definitions
An appropriate amount
‘Appropriate’ is defined at regulation 76(8)(a) of The Money Laundering, Terrorist Financing and Transfer of Funds (Information on the Payer) Regulations 2017 (MLR 2017), as ‘effective, proportionate and dissuasive’.
‘Effective’ means that the penalty should address the non-compliance and promote compliance with MLR 2017.
‘Proportionate’ means that the sanction must be proportionate to the nature and severity of the contravention and the circumstances of the relevant person penalised.
‘Dissuasive’ means that the penalty should dissuade the relevant person as well as other supervised businesses from continuing their non-compliant behaviour. The penalty should signal to the supervised population as a whole that non-compliance is serious and will be treated as such.
These factors need to be balanced against the requirement that the penalty should reflect the circumstances of the person (P). The decision maker (DM) needs to consider the factors in regulation 83 MLR 2017 when deciding whether the penalty amount is appropriate. For more information see ECSH85625.
Relevant requirement
The methodology prescribed by MLR 2017 for supervision requires businesses that we supervise to comply with what are described as relevant requirements which are set out in full in schedule 6 MLR 2017.
Failure to comply with a relevant requirement can attract all the sanctions in MLR 2017 including a financial penalty. The decision as to what is the most appropriate penalty or penalties is to be decided on a case-by-case basis, applying the relevant principles in MLR 2017 and within the operational guidance.
A person (P)
A financial penalty can be imposed on a person. A person means any person, including a body of persons corporate or unincorporate (that is, a natural person, a legal person and, for example, a partnership). Therefore, financial penalties can be imposed on individuals as well as businesses who have contravened a relevant requirement.
A financial penalty can also be imposed on an officer of a business where HMRC can evidence that the officer was knowingly concerned in a contravention of a relevant requirement.
An officer of a person
This definition of officer is defined in regulation 3 as:
(a) in relation to a body corporate, means—
(i) a director, secretary, chief executive, member of the committee of management, or a person purporting to act in such a capacity, or
(ii) an individual who is a controller of the body, or a person purporting to act as a controller.
(b) in relation to an unincorporated association, means any officer of the association or any member of its governing body, or a person purporting to act in such a capacity
(c) in relation to a partnership, means a partner, and any manager, secretary or similar officer of the partnership, or a person purporting to act in such a capacity.
Further definitions can be found at:
Unprompted and prompted – see ECSH82825.
Careless – see ECSH82830.
Deliberate –see ECSH82835.
Knowingly concerned – see ECSH82840.
Co-operation –see ECSH82845.
Relevant period – see ECSH82850.