Penalties guidance: when to issue a penalty
A penalty will be the most appropriate sanction for most regulatory breaches, unless the breaches are sufficiently serious to warrant either withdrawing fit and proper status (for TCSPs and MSBs) or a criminal investigation.
An officer may, in the circumstances explained in MLR1PP6100, issue a warning letter instead of a penalty but where a warning letter has already been issued and the breaches have continued, a penalty must be issued.. The correct level of any penalty must be set by using the following guidance to ensure all penalties are in keeping with the purpose of our penalty regime.
All civil penalties are discretionary and we will decide when a penalty is appropriate.
Regulation 42 of MLR 2007 and Regulation 11 of the Transfer of Funds Regulations 2007 (referred to as the Payments Regulation) and Regulation 25 of the Counter Terrorism Act 2008 all say that the supervisory authority may issue a penalty. The use of the word ‘may’ allows us the discretion in deciding whether to issue a penalty or not.
However, the application of discretion does not mean it is our policy to issue repeated warnings for the same breaches. In practice this means that for most regulatory breaches a penalty will be issued immediately or in the less serious, first time breach cases,a warning letter may be issued followed by a penalty when no significant improvement has been made by the business. The level of the penalty will be calculated using the civil penalties framework and the correct method of calculating penalties is fully explained in MLR1PP8000.