Economic Crime Supervision Handbook

ECSH73500 - Regulation 70 Entry of premises under warrant

What is regulation 70?

Regulation 70 Money Laundering, Terrorist Financing and Transfer of Funds (Information on the Payer) Regulations 2017 (MLR 20178) gives a duly authorised officer the power to apply for a warrant, and if issued by the court, enables that officer to:

• To enter the premises specified in the warrant.
• To inspect any cash found on the premises.
• To take copies of, or extracts from, any documents or information appearing to be of the relevant kind.
• To require any person on the premises to provide an explanation of any document or information appearing to be of the relevant kind or to state where it may be found; and
• To use such force as may be reasonably necessary.
• Where information of the relevant kind is contained in a computer or other storage device, or is recorded in any other way otherwise than in legible form, the warrant authorises the executing officer to take possession of that information in a form in which it can be taken away and in which it is legible.

And a trained executing officer, named in the warrant, to:

• Search the premises and take possession of any documents or information appearing to be documents or information of a kind in respect of which the warrant was issued (“the relevant kind”) or to take, in relation to any such documents or information, any other steps which may appear to be necessary for preserving them or preventing interference with them.

See below for more information.

Most Economic Crime-Supervision (EC-S) interventions are carried out with the cooperation of the business and will not require any use of statutory powers of entry.

Regulation 70 is very powerful and intrusive and therefore is used in circumstances where it is a reasonable and proportionate action available to address non-compliance with MLR 2017 and/or high levels of risk of money laundering, terrorist financing or proliferation financing.

It is can either be used as an escalation of powers, such as non-compliance with a regulation 69 notice, or as the first use of powers, where a case requires it. For instance, where information indicates a high level of risk of money laundering, terrorist financing or proliferation financing.

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Who can apply for apply for and execute a Regulation 70 warrant?

A regulation 70 warrant must be applied for by a ‘duly authorised officer’. This is an officer of HMRC authorised in writing by an officer of at least Senior Officer grade or above (regulation 70(13)(b).

EC-S officers are responsible for making the application to the court for a warrant (the ‘duly authorised officer’). The “authorising officer” is different to the “executing officer”. Only FIS/RIS officers who are appropriately trained to execute a Police and Criminal Evidence Act 1984 (PACE) warrant or Proceeds of Crime Act 2002 (POCA) warrant may act as an ‘executing officer’ under regulation 70.

Therefore EC-S would be required to rely upon assistance from HMRC colleagues, normally from EC Operations, to execute the warrant. These officers usually carry out searches under HMRC criminal investigations powers.

An EC-S officer must be named on the warrant application as the ‘Accompanying Officer’ but you should note that the Executing Officer’s role (the EC Operations officer) is to gain access to the premises and ensure appropriate safeguards under the PACE (and similar devolved provisions) are maintained.  The role of the ‘accompanying’ EC-S Officer is to confirm that the documents or information matches is what is listed on the warrant and is to be seized.  

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Grounds to apply for a regulation 70 MLR 2017 warrant

The court may issue the warrant if satisfied on information given on oath by the authorised officer that at least one of the following four conditions are satisfied.

There are reasonable grounds to believe that:

• There has been a failure to comply with a regulation 66 information notice, either wholly or in part, and there are documents or information on the premises, specified in the warrant, which have been required, or
• The premises specified in the warrant are the premises of the business, part of their group, or of a third person referred to in regulation 66(8) - see ECSH71500.

And there are documents or information on the premises, specified in the warrant which could be required using a regulation 66 information notice and that a regulation 66 information notice would not be complied with or that information or documents would be removed, tampered with or destroyed, or

• That an officer has been obstructed in the exercise of the power under regulation 69 and there is information, documents or cash on the premises that could be inspected under regulation 69.
  

Or there are reasonable grounds to suspect:

• That an offence under MLR 2017 has been, is being or is about to be committed and there is information or documents on the premises relevant to that offence.

Reasonable grounds ‘to believe’ and ‘suspect’ are explained in ECSH73000.

These powers are available where the strict legal criteria are met, and our internal governance procedures are followed.

Applying for the warrant

The regulation 70 MLR 2017 warrant application form must be submitted to the appropriate court for the jurisdiction in which it will be exercised as specified in the regulation: in England and Wales, a justice of the peace in a magistrates court;  in Northern Ireland, a lay magistrate; or in Scotland, a sheriff or summary sheriff.

The warrant must:

• Identify the premises to which the application relates and state that the premises is not used only as a dwelling.
• State that the officer has reasonable grounds to suspect a warrant is necessary in connection with the exercise of the supervisory functions of the supervisory authority for which the officer is acting and the warrant is sought for the purpose of those functions.
• State that the officer executing the warrant:
  • will give to any person on the premises, when entering the premises, evidence of identification and authority to act on behalf of the supervisory authority, and
  • will give to that person, no later than on entering the premises, a notice identifying and explaining the powers exercisable under this regulation, and
• State that the warrant is sought in relation to material specified in the application, or that there are reasonable grounds for suspecting that there is material falling within regulation 66 on the premises.

Additionally, the warrant must specify who is accompanying the executing officer e.g. ‘officers from HMRC’s economic crime supervision teams to identify material’, ‘a locksmith to assist in gaining entry’.

The reason for the use of any power must be kept under review while it is being applied for and/or executed and where there is a change in circumstances or new information is available that changes the basis of the original authority a new authority should be sought, and a new notice should be issued to the business, if necessary.

 

Executing the warrant

Officers who can execute the warrant are set out above.

When entering the premises, any person on the premises will be given evidence of identification of the HMRC officers, along with evidence that they have authority to act on behalf of the supervisory authority (EC-S).

Regulation 70 requires that a notice is provided to a person, no later than on entering the premises, a notice identifying and explaining the powers excisable under regulation 70 and state the ground the warrant was issued under.

 

What can be searched for?

Regulation 70 builds on the powers to require information and documents under regulation 66 and supplements the power to enter premises without a warrant under regulation 69, however there are important differences:

• Documents and information can be searched for, and we may take possession of them. We may also take copies or extracts in the same way as under regulation 69 – see ECSH73000.
• Any person on the premises is required to explain documents and information and/or show us where it is/they are.
• The warrant authorises the executing officer to take possession of information in a form in which it can be taken away so this may involve removing computers, phones or other media storage.
• Information on a computer may be extracted in a legible form e.g. uploaded on to removable media.

Officers only have the power to inspect cash found on the premises, please see ECSH74000 for further guidance on dealing with suspicious cash.

 

What happens in the event of non-compliance or obstruction?

Anyone obstructing an officer could potentially be arrested under Section 31 Commissioners for Revenue and Customs Act 2005 (CRCA) but this can only be done by an appropriately trained FIS officer.

The requirement to comply with a regulation 70 warrant is a relevant requirement under Schedule 6 MLR 2017. As such, if a person fails to comply, then regulation 76 provides HMRC with the power to impose civil penalties as set out in regulation 76. Non-compliance with a regulation 70 warrant is also a criminal offence for the purposes of regulation 86 MLR 2017.