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HMRC internal manual

Money Laundering Regulations: Compliance

The scope of our supervision: Business Categories

These businesses will generally fall into the following categories:

  • Relevant businesses that are trading unsupervised and have never registered with HMRC.
  • Relevant businesses previously trading under a different name that are trading unsupervised and have not registered with HMRC.
  • Relevant businesses whose registration we have cancelled

Compliance Officers are responsible for carrying out further checks to establish the relevant facts where a specific business is suspected of trading unsupervised when required to register with HMRC.

This process may involve:

  • The Registration Team who have identified businesses that:

    • fail to pay the annual fee
    • fail to submit complete applications
    • have had their applications rejected for reasons such as failing the fit and proper test
    • have had their registration cancelled for reasons such as failing the fit and proper test

The RTT who are responsible for:

  • analysing and enhancing information about non-registered businesses that fall within the scope of the Regulations
  • selecting the businesses that present the highest risk of trading unsupervised for compliance action

The Central Intervention Team who are responsible for:

  • making initial contact with a business to establish if they are trading unsupervised
  • Gathering further evidence of trading unsupervised

Regional Compliance Officers who are responsible for:

  • Visiting businesses that we have identified are trading without being supervised or registered with HMRC to gather further evidence which we may use to support either penalty action or prosecution.

Trading without being supervised or registered with HMRC can be a very serious breach because it is often indicative of involvement in money laundering or an attempt to hide from supervision to avoid implementing anti-money laundering controls.

This in turn may indicate that a business is being used for money laundering or terrorist funding, either with or without collusion. There are several reasons why a business will fail to register with HMRC. These will range from ignorance, or misunderstanding to deliberate non- compliance with intent to hide from supervision. Where we identify trading unsupervised we will take account of the reasons and whether or not the breach was voluntarily disclosed to us.

The appropriate way of identifying where relevant businesses are trading unsupervised where they should have registered with HMRC will depend on the type of business and the information HMRC hold about the business. Compliance Officers will need to select which are the most appropriate under the specific circumstances. These methods are not mutually exclusive and where there are reasonable grounds to suspect that business is trading unsupervised and required to register with HMRC a combination of methods may be appropriate in order to gather sufficient evidence to take enforcement action.