ECSH80500 - Sanctions for non-compliance: introduction - sanctions
Source: gov.uk (2025-07-03)


HMRC have a range of criminal and civil powers under The Money Laundering, Terrorist Financing and Transfer of Funds (Information on the Payer) Regulations 2017 (MLR 2017) (https://www.legislation.gov.uk/uksi/2017/692/contents) which can be used by staff in Economic Crime Supervision (EC-S) to address non-compliance. The explanatory memorandum (https://www.legislation.gov.uk/uksi/2017/692/pdfs/uksiem_20170692_en.pdf) to MLR 2017, states at paragraphs 7.28 and 7.29:

"Information and investigation

7.28 Part 8 of the Regulations gives supervisors the tools they need to monitor businesses effectively and to take appropriate action if needed, for example, by using their information gathering and investigatory powers.

Enforcement

7.29 The government takes the view that all supervisors should be able to demonstrate that they have provisions which enable them to impose effective, proportionate and dissuasive sanctions. The ability of a supervisor to impose sanctions (Part 9 Enforcement) is an important deterrent and incentivises regulated businesses to comply with the Regulations. Where supervisors are unable to impose suitable pecuniary sanctions, they may consider the use of the HMRC/FCA powers.

The emphasis above is ours (rather than being in the explanatory memorandum). The key point is that sanctions are a means to an end – that end being better compliance across all supervised businesses – rather than an end in themselves. Another way of looking at it is that sanctions help reduce the risks in supervised sectors. They do this both by their direct effect on a supervised firm such as, if we suspend or cancel a registration, and by their indirect impact on other businesses we supervise. For example, how other supervised businesses perceive and react to sanctions imposed on other businesses in their sector.

Decision makers should consider both the direct and indirect impact of sanctions when considering the right measure or range of measures to apply.

In addition to the range of supervisory sanctions we can impose, EC-S can refer cases (https://www.gov.uk/hmrc-internal-manuals/economic-crime-supervision-handbook/ecsh85000) for criminal investigation and prosecution. These referrals are likely to be for the most serious contraventions of MLR 2017 and/or for offences under the Proceeds of Crime Act 2002.

EC-S have developed a sanctions framework model, see ECSH81025 (https://www.gov.uk/hmrc-internal-manuals/economic-crime-supervision-handbook/ecsh81025), that maximises the use of the full range of powers (https://www.gov.uk/hmrc-internal-manuals/economic-crime-supervision-handbook/ecsh70000) available under MLR 2017.

Additionally, there are civil penalties and criminal sanctions for failure to comply with the Schedule 7 of the Counter-Terrorism Act 2008 (/www.legislation.gov.uk/ukpga/2008/28/schedule/7) (CT Act). These include fines and imprisonment for up to two years.

If you identify breaches under the CT Act, you should make an internal referral as appropriate, see ECSH85000 (https://www.gov.uk/hmrc-internal-manuals/economic-crime-supervision-handbook/ecsh85000).

Sanctions against individuals

A sanction can be used in isolation or as part of a range of sanctions to address the risk(s). Regulation 79 MLR 2017 specifically enables HMRC to take one or more of the sanctions available under regulation 76 MLR 2017 (penalties and censure) and regulation 78 MLR 2017 (prohibitions on management) for the same contravention. Where the decision maker (DM) has identified that an individual who was an officer of the business at the material time was knowingly concerned, see ECSH82840 (https://www.gov.uk/hmrc-internal-manuals/economic-crime-supervision-handbook/ecsh82840), in the contravention, a sanction can be imposed on the officer, see ECSH82810 (https://www.gov.uk/hmrc-internal-manuals/economic-crime-supervision-handbook/ecsh82810), as well as, or instead of, the business.

It should be noted that we may also consider that the contravention leads to a decision that in money service businesses (MSB) / trust or company service provider (TCSP) a beneficial owner, officer or manager (BOOM) and/or the business is not fit and proper (https://www.gov.uk/hmrc-internal-manuals/economic-crime-supervision-handbook/ecsh45030)and a suspension or cancellation (https://www.gov.uk/hmrc-internal-manuals/economic-crime-supervision-handbook/ecsh83575) of registration might also be appropriate in these circumstances.