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HMRC internal manual

MLR1 Penalties Guidance

Penalty guidance: compliance history

In addition to considering the reasons why a breach has occurred, the compliance history of the business is another important criterion for determining the reductions we are prepared to allow. Because the penalty framework is based on escalating penalties, smaller reductions will be given when a second or third penalty is issued for related breaches. Unless the breach is not serious we will mostly issue a penalty notice on the first failing or breach. Because this is the first penalty a 70% reduction to the maximum penalty will normally be given. If the failings are still not corrected, a 50% reduction will normally be given for the second penalty, and a 20% reduction for any further penalties. When determining the compliance history we will take account of any penalties and warnings issued under previous Money Laundering Regulations. If a business has already received penalty notices for parallel breaches under previous Regulations, they will be counted as breaches when considering the size of any reduction.

If however the failing is corrected but there is a subsequent breach of an unconnected Regulation, the unconnected breach will normally be treated as a new breach and the full reduction will be given.