AML: HMRC flexes enforcement muscle to the tune of £7.8 million

In September 2019, HM Revenue and Customs (HMRC) published its list of businesses that have not complied with the Money Laundering Regulations 2017 (MLR 2017) for the tax year 2019 to 2020.
 

Within this it revealed that it has fined Touma Foreign Exchange Ltd £7.8 million for a wide range of serious failures under the Money Laundering Regulations. HMRC’s publication reveals that the business breached rules on:

• risk assessments and associated record-keeping
• policies, controls and procedures
• fundamental customer due diligence measures
• adequate staff training

This is a considerable departure from the fine of £215,000 issued to estate agents Countrywide earlier this year and lower level fines to date.

Money Service Businesses are firmly within HMRC sights when it comes to money laundering compliance. Simon York, Director of HMRC’s Fraud Investigation Service confirmed that:

“We know that criminals use MSBs to disguise and move dirty money, and we’re determined to thwart them by helping businesses avoid being exploited in this way.”

Get your house in order

Sounding a harsher note he said:  

“However, a word to the wise for those firms who, either by ignorance or design, continue to flaunt the rules – this record fine shows we mean business, so get your house in order before we come knocking.”

Indeed, in the National Economic Crime Plan 2019-2022 from July of this year, it was confirmed that HMRC will deliver an enhanced risk-based approach to its AML/CTF supervision by March 2021.

This will include tightened registration processes and an increase in interventions across their supervisory population, which includes money service businesses, trust and company service providers, estate agents, high-value dealers and accountancy service providers.  It will also include a new sanctions framework to ensure “a robust approach that uses the full range of HMRC’s powers effectively by April 2020.”

Therefore, businesses regulated by HMRC for anti-money laundering purposes need to take note of this robust approach and take a close look at their AML policies and procedures, staff training and customer due diligence measures. For those who take a complacent attitude, the risks are significant. This includes individuals who may believe it is just a corporate issue – it is not.  Enforcement can be taken against an officer of a business, a director, senior manager or nominated officer. In addition, the risk is not just one of civil penalties; criminal proceedings can also be instigated. See here for more information.

A wider impact

Moreover, this action sends a message more widely to all entities and individuals with obligations under the MLR 2017. HMRC has an obligation to co-operate and share information with other supervisory authorities and the Office of Professional Bodies Supervisors (OPBAS), as highlighted in the Anti-money laundering and counter-terrorist financing: supervision report 2017-18. Added to the firm commitment from Government to improve information sharing, this action may have set the trend for enforcement action to come.

Further information

For further information on the issues raised in this blog post, please contact a member of our criminal team.

About the author

Nicola Finnerty is a partner in the criminal litigation team. She has experience of fraud, corruption  (including the Bribery Act) and cartel matters, financial compliance, money laundering, asset seizure and confiscation cases, through to sexual offence cases, drugs, murder and offensive weapon crimes.