HMRC monitors over 30,000 businesses to ensure their compliance with the Money Laundering, Terrorist Financing and Transfer of Funds (Information on the Payer) Regulations 2017 (the regulations).
Businesses which are found to have breached their regulatory obligations are at risk of civil and even criminal penalties. They also fall to be included in a list maintained by HMRC and published on the government’s website, which identifies the name of the business and its registered address, a brief description of the breach and the penalty received. The exception to this naming and shaming is if HMRC decide that publishing the full identity of the business would be disproportionate and it should therefore remain anonymous.
The latest list, published on 7 January 2021, has garnered significant attention because it contains details of the largest ever fine issued by HMRC. The recipient of this ignominious record is a money service business which was fined £23.8 million for ‘significant breaches’ between July 2017 and December 2019 relating to the carrying out of risk assessments; having the correct policies, controls and procedures; conducting due diligence; and record keeping. Although by far the largest financial penalty, it is not the first significant fine imposed on this type of business; in 2019 HMRC fined another money service business £7.8 million for failure to comply with the regulations.
Money service businesses have traditionally been considered a high risk area for money laundering and terrorist financing purposes because they offer customers the ability to remit cash, exchange currencies and cash cheques quickly and easily without the need to rely on banking facilities. HMRC’s decision to focus its efforts on these businesses, in conjunction with the FCA, the police and other law enforcement agencies, appears to reaping success and financial reward.