Category: HMRC News and Guidance

Latest Guidance and news from HMRC

  • 03/02/09 Important information for Money Service Businesses (MSBs)

    This note is to alert all Money Service Businesses (MSBs) to HM Treasury’s new powers to issue directions under the Counter Terrorism Act which came into force on 26 November 2008.

    What powers does HM Treasury have?

    HM Treasury (HMT) may give a direction if one or more of the following apply:

    • The Financial Action Task Force has advised that measures should be taken in relation to the country because of the risk of terrorist financing or money laundering activities
    • HMT reasonably believe that there is a risk of terrorist financing or money laundering activities and that this poses a significant risk to the national interests of the UK
    • HMT reasonably believe that a country is involved in developing nuclear, radiological, biological or chemical weapons and that this poses a significant risk to the national interests of the UK

    What does this mean for MSBs?

    HMT could issue directions to all MSBs, or to some types of MSBs or to a particular business. This means that you must be ready to deal with these directions by training your staff and including how to deal with them in your anti money laundering systems.

    How will I know a direction has been issued?

    MSBs should sign up to Treasury’s email alert system at HM Treasury AML/CTF mailing list

    What will I have to do?

    Specific guidance will be issued with each direction and you will need to read the conditions imposed very carefully to find out what you need to do.
    You will have to identify the customers or transactions that are affected and may need to carry out more detailed checks on them.

    You may need to do one or more of the following:
    • Carry out enhanced customer due diligence (see MLR 8 para. 7.12 (PDF 653K)). You would normally do this in high risk situations such as when the customer is a politically exposed person.
    • Carry out ongoing monitoring of customers in a business relationship (see MLR 8 Part 9 (PDF 653K)). This is the kind of monitoring you would normally do in high risk situations.
    • Report all transaction with these people and organisations. You may need to do this weekly.
    • Cease business with certain people and organisations.

    What if I have to cease business with certain people and organisations?

    If this happens your customer or you can apply for a license to exempt them from this. HMT will provide further information on how to apply for licenses when they issue a direction.

    Visit the BTC website for compliance help and support for firms in the regulated sector.

  • 01/01/09 Important Notice for Accountancy Service Providers who have failed to apply for Money Laundering Regulations Registration.

    If you are in business as an Accountancy Service Provider and are required to register with HMRC or an approved professional body under the Money Laundering Regulations 2007 you are trading illegally if you missed the deadline of 1 January 2009 and may be liable to a penalty or criminal prosecution.

    To avoid penalties or prosecution, however, make an unprompted disclosure and send HMRC your completed application form MLR100 and appropriate fee (£95.00) without further delay. Forms and fees should be sent to:

    Money Laundering Regulations Registration Team.

    7th Floor, Alexander House, 21 Victoria Avenue Southend–on-Sea, SS99 1AG

    If you are prompted over non registration by your supervisor either by letter or by phone, the minimum penalty will be £500.

    The penalty for breaches of the registration  process is up to a maximum of £5,000 if the breach was a failure to take reasonable steps. However this can be increased if the breach was deliberate. This will also include future amendments to your registration details.

    Visit the BTC website for compliance help and support for firms in the regulated sector.

  • Q. What are the Specific Breaches of the Money Laundering Regulations?

    The specific failings and breaches which are clearly defined within the Money Laundering Regulations 2007 are;

    • Regulation 7 – Failure to apply appropriate risk-sensitive customer due diligence measures
    • Regulation 8 – Failure to apply appropriate and risk-sensitive ongoing monitoring of a business relationship
    • Regulation 9 – Failure to comply with the requirements in timing of verification of identity of clients and any beneficial owner
    • Regulation 11 – Continuing with transaction/business relationship where unable to apply customer due diligence measures
    • Regulation 14 – Failure to apply enhanced client due diligence and ongoing monitoring where required
    • Regulation 18 – Failing to follow a direction made by HM Treasury under this Regulation
    • Regulation 19 – Failure to keep the required records
    • Regulation 20 – Failure to establish, maintain, monitor and manage the required risk based policies and procedures
    • Regulation 21 – Failure to take appropriate measures to provide the required training
    • Regulations 26, 27(4), 33 – Failure to comply with registration requirements specified by the commissioners

    These breaches may attract civil or criminal procedures from your supervisor

  • Q. I am just starting out in business in the regulated sector, what should I do?

    Your first requirement before commencing work is to be registered for compliance supervision with an appropriate supervisor.

    To commence in business without the appropriate registration means you are committing a criminal offence. The penalty for this is up to a maximum of £5,000 if the breach was a failure to take reasonable steps. However this can be increased if the breach was deliberate.

  • Q. What is my supervisor looking for me to do?

    In simple terms there are four main things which all firms must do and be able to demonstrate compliance to a Supervisor, they are:-

    1. Your firm must adopt appropriate policies and procedures for compliance for which the MLRO must implement into the systems of the firm.
    2. Ensure that all staff have adequate training on understanding their roles and responsibilities under the UK’s AML regime, the offences for ML and procedures including client due diligence and reporting.
    3. Conduct client due diligence (CDD) procedures on all clients no matter how long they have been clients, including those pre 1 March 2004 clients at an appropriate time, including risk assessment, identity and verification and ongoing monitoring. 
    4. Implement a reporting regime for the reporting of Suspicious Activity Reports (SAR’s) to the Serious Organised Crime Agency (SOCA).  

    You must ensure that all these policies & procedures, evidence of identity and account opening procedures, internal & external reports and any other AML procedural matters are documented correctly and records kept for a minimum of 5 years.

  • Q. I am an accountancy service provider, who is my supervisor?

    HM Treasury approved Professional Bodies for supervisory purposes are;

    1. Association of Chartered Certified Accountants
    2. Institute of Chartered Accountants in England and Wales
    3. Institute of Chartered Accountants in Scotland
    4. Institute of Chartered Accountants of Ireland
    5. Association of Accounting Technicians
    6. Association of International Accountants
    7. Association of Taxation Technicians
    8. Chartered Institute of Management accountants
    9. Chartered Institute of Public Finance Accountants
    10.Chartered Institute of Taxation
    11.Insolvency Practitioners Association
    12.Institute of Certified Bookkeepers
    13.Institute of Financial Accountants
    14.International Association of Bookkeepers

    Members of the above professional bodies will be supervised for complaince under their relevant professional assurance scheme and subject to the relevant members disiplininary codes of prectice.

    All other firms undertaking relevant activity by the way of business in the accountancy sector will register with HMRC for supervison

  • Financial Action Task Force (FATF) statement

    Financial Action Task Force (FATF) statement

    Financial institutions in the UK should give special attention to business relations and transactions with persons, including companies and financial institutions, from jurisdictions that do not adequately apply the FATF Recommendations.

    The FATF is an inter-governmental body that develops national and international policies to combat anti money laundering (AML) and the financing of terrorism (CFT). It has released a public statement on several countries highlighting their concerns over deficiencies in their AML/CFT legislation.

    The countries are Iran, Pakistan, Uzbekistan, Turkmenistan, Sao Tome and Principe, and the northern part of Cyprus.

    More information on FATF can be viewed on their website.

    If you deal with any of the countries listed you should take account of these concerns in your AML Risk Assessment