ECSH81025 - Sanctions for non-compliance: sanctions framework: sanctions framework

The sanctions framework delivers carefully considered sanctions tailored to case facts, a harder-edged approach to non-compliance and will ensure that the sanction is in proportion to the severity of the contravention and nature of the business. The framework supports our role in tackling non-compliance and associated risks in the sectors HMRC supervises including the risks of the business being exposed to money laundering, or terrorist or proliferation financing. We provide a robust deterrent to non-compliance by:

  • considering the full range of sanctions available to us
  • using the most appropriate sanction at the right time
  • publishing the sanction where appropriate.

In considering how and when to use the different types of sanctions, each case must be considered on its own merits, taking into account the facts and circumstances present in the case. When deciding on the most appropriate sanction, the decision-maker (DM) must always consider the risk and extent to which the business is likely to be vulnerable to money laundering and terrorist financing and whether the sanctions being considered will address both the non-compliance and the risk(s).

The range of sanctions available to staff in the framework are found in:

Where non-compliance is attributable to the behaviour and/or actions of a beneficial owner, officer or manager (BOOM) in a Trust or Company Service Provider (TCSP)/Money Service Business (MSB), it can lead to reconsideration of whether that person remains fit and proper to hold that position in that business. This reconsideration of fitness and propriety to hold their position in supervised business is not a sanction of itself but is a vital risk management process and tool. It can also lead to a decision that the business itself is not fit and proper. Whilst these fit and proper decisions are not sanctions of themselves under the Money Laundering Regulations (MLRs), they can still have a big impact on the business and deal with the risks because they can lead to a sanction being taken against the business: cancellation/suspension of registration.

Where a BOOM in an Accountancy Service Provider (ASP)/High Value Dealer (HVD)/Estate Agency Business (EAB)/Letting Agency Business (LAB) or Art Market Participant (AMP) is identified who has not been approved or their approval has become invalid (due to the BOOM having a relevant unspent conviction listed in Schedule 3), consideration should be given to whether a sanction against the business is appropriate.

In order for the DM to determine whether a sanction can be taken against the business, the DM will need to establish all relevant facts and whether the business has taken all reasonable care to ensure that the BOOM is not appointed or does not continue to act where approval has not been given or has become invalid. Where DM establishes that the business has failed to take reasonable care the business would be in breach of the MLRs. The appropriate sanction in this case could be a financial penalty. The DM must not issue a penalty if the business had taken all reasonable steps and exercised all due diligence to comply with the relevant requirement. See ECSH 82525. However, if the risks are serious enough then a suspension or cancellation of the registration may be more appropriate instead of/as well as a penalty.

It is important to use the most appropriate sanction(s) as soon as it is appropriate to do so having due regard to all the facts of the case.

MLR 2017 Regulation 85 requires HMRC to publish details of penalties and prohibitions of management that we impose. We may also publish details of suspension, cancellation, and refusal of registrations.

We call this Publishing Details of the Non-Compliant (PDNC).