Enforcement By Supervisors

The following statements help sum up the approach by supervisors regarding the compliance regime.

Law enforcement agencies and regulators are working with the regulated sector generally to assist compliance and increase understanding of how to effectively mitigate risks.

That is to “help, support and educate”

However, be in no doubt of the seriousness of the sanctions for a failure to comply, nor the willingness of supervisory and enforcement bodies to take appropriate action against non-compliance.

That is by “fines, de-registration or prosecution”

The range and type of penalties and sanctions available to supervisors can be summarised as follows;

  • Warning letters
  • A penalty notice without a financial fine
  • Range of financial penalties
  • Withdrawing of F&P test
  • Cancellation of business registration
  • A criminal investigation and prosecution

HMRC inform us that the purpose of supervision is to encourage businesses to become compliant and improve compliance so penalty reductions up to 100% may be offered. There must be an element of deliberate negligence for non-compliance in order for the firm to receive a penalty.

The vast majority of firms will have no supervisory problems. They will implement policies and procedures for all aspects of compliance and reporting and ensure that all relevant staff are trained accordingly.  There will be holes in records, none are perfect, but we learn from our mistakes.

A supervisory authority must not impose a penalty on a person or firm where there are reasonable grounds for it to be satisfied that the person took all reasonable steps and all due diligence to ensure that the requirements would be complied with. (r.42(2))

Supervisors are also working on a ‘risk-sensitive’ basis, targeting their resources on those areas where it will achieve the largest benefit. All the supervisor is looking for is for you to ‘step into the culture of compliance’ and perform your duties to a standard of that of ‘a reasonable standard’

Section 4: Self assessment. You should an understanding of your role within the supervisory regime.

  1. Do you know which is the supervisory authority or body for your firm?
  2. Do you understand the risk to the firm for non-compliance?
  3. Do you understand your AML responsibilities within your firm?