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HMRC internal manual

MLR1 Penalties Guidance

HM Revenue & Customs
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Penalties guidance: behaviour based penalty reductions

There are no specific requirements in the Regulations which oblige us to give penalty reductions once an appropriate penalty has been calculated.

We believe however that allowing reductions to the starting penalty will encourage compliant behaviour and discourage future non-compliance. This is ultimately the purpose of penalties.

This means that once the maximum penalty has been calculated using the penalty framework, this will not in most cases be the final financial penalty or fine.

The final penalty will depend on both the behaviours currently being demonstrated by the business and its history of compliance with the Money Laundering Regulations.

Behaviours are best understood as the willingness and actions a business takes in order to become compliant and how these behaviours are shown to us as supervisor.