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HMRC internal manual

MLR1 Penalties Guidance

Penalties guidance: TCSPs/ASPs/EABs: the additional penalty: introduction

For ASPs/TCSPs/EABs the third step when calculating the additional penalty is to look at the number of relevant clients, exposed by the breaches during the relevant period.

The general principles to follow when calculating or making determinations of the additional penalty for TCSPs/ASPs/EABs are similar to those for MSBs and HVDs. There are however some significant differences because of the nature of these businesses. For TCSPs/ASPs/EABs the consequences of any breaches are likely to be that any potential money laundering will take place through their clients businesses, rather than directly through the TCPS/ASP’s/EABs business. TCSPs/ASPs/EABs are primarily included in the Regulations because they are gatekeepers, not because they are a high risk of being used directly to launder money.

To ensure the size of any penalty is geared to the degree of risk that money laundering has taken place as a result of the breach, the size of additional penalty is linked to the number of clients the TCSP/ASP/EAB failed to monitor for MLR purposes, and not the amount the TCSP/ASP/EAB received in fees for its services.

This means that unless the penalty framework is suspended, the additional penalty for TCSPs/ASPs/EABs will be based on scale charges, found at MLR1PP9000. These are determined by the number of relevant clients, exposed by the breaches during the relevant period.

There is no direct link between the fee a TCSP or ASP is paid for their services and the amount that could potentially be exposed by failing to apply the Regulations to their clients. The more clients a non-compliant business has, the greater the opportunities will be for money laundering to take place. It is an important point to remember that the risk of money laundering is in relation to the activities carried out by the client, not the TCSP/ASP/EAB.