Author: Nicola Sharp
21 June 2023
2 min read
Nicola Sharp of financial crime specialists Rahman Ravelli considers the statistics released by HM Revenue and Customs about the money laundering fines it has issued.
It fined 240 businesses a total of £3.2 million between 1 July and 31 December 2022 for breaching the Money Laundering Regulations, which are in place to prevent criminals laundering the money they have made through illegal activity. In addition to these named businesses, HMRC imposed smaller fines totalling more than £200,000 on another 179 companies for rule breaches.
The Money Laundering, Terrorist Financing and Transfer of Funds (Information on the Payer) Regulations 2017 came into force 26th June 2017. Businesses that are obliged to comply with the Regulations – known as supervised businesses - have to register with HMRC.
As the supervisor of the Regulations, HMRC assesses the activities of tens of thousands of businesses across the UK. It has a duty to publish details of businesses that fail to comply with the Regulations.
The largest of the fines issued in the six months to the end of 2022 was imposed on the London-based Xpress Money Services Ltd. It was fined £1.4 million for failing to carry out risk assessments, not having appropriate anti-money laundering controls in place and not conducting proper due diligence checks.
HMRC works with a number of other enforcement agencies and government departments to tackle economic crime, crack down on breaches of the Money Laundering Regulations and target those businesses not meeting their money laundering obligations. HMRC aims to force companies that do not comply with the Money Laundering Regulations out of business. The number of money service businesses has fallen by around a third from 1,508 in 2020 to 1,049 in 2023, with the number of money service business agents dropping from 35,507 to 30,217 in the same period.
When publishing the latest statistics, HMRC’s Deputy Director of Economic Crime, Fraud Investigation Service, Nick Sharp, said:
“Money laundering is not a victimless crime. We are here to help businesses protect themselves from criminal attacks and will continue to tackle the minority of businesses which do not comply with the Money Laundering Regulations.
“Serious and organised crime costs the UK billions of pounds every year and our anti-money laundering supervision is a vital tool in combatting that.’’
Money service businesses offer currency exchange, money transmission and cheque cashing services. But they have been used regularly by customers to launder their proceeds of crime. Such businesses are expected by the authorities to have robust risk assessment and policies and procedures in place to ensure they can identify and report suspected money laundering.
HMRC’s naming and shaming of companies that fail to comply with the Regulations and its imposing of large fines can be seen as an attempt to come down hard on non-compliant firms. Businesses that do not follow AML regulations can lose their licence to operate in the UK.
Such moves are an indicator of the government’s determination to use what measures it can to tackle financial crime and the associated problem of money laundering. Earlier this year, the government published its Economic Crime Plan for 2023 to 2026, which builds on its existing work to reduce money laundering in this sector.
HMRC has a variety of enforcement powers it can use for businesses that fail to comply with the Money Laundering Regulations. These include issuing a financial penalty or a statement of censure criticising the firm, imposing limits on a person’s management of a business, suspending or cancelling a company’s registration or even referring a case for criminal investigation.
Nicola is known for her fraud, civil recovery, arbitration and business crime expertise, her experience of leading the largest financial disputes and multinational investigations and her skills in devising preventative measures and conducting internal investigations for corporates.