ECSH82000 - Sanctions for non-compliance: warning letters

Introduction

Warning letters can be used to address non-compliance by the business with their obligations under the Money Laundering Regulations (MLRs). There is no legal requirement within the MLRs to issue a warning letter. However, they can be used where the non-compliance is considered to be minor breaches of the MLRs, and other sanction(s) would not necessarily be an appropriate response to the non-compliance identified. When deciding whether to issue a warning letter consideration should be given to the risk(s) posed by the breach identified. Warning Letters may be appropriate for first-time minor breaches of the MLRs. If the decision maker (DM) considers the breaches identified and/or the risks are not minor, consideration should be given to whether other sanctions are more appropriate to address the non-compliance and the risk.

Minor breaches would be those that did not lead to an increased risk of money laundering, terrorist financing or proliferation financing (ML/TF/PF)

Warning Letters are designed to promote a positive behavioural change and to ensure that minor non-compliance is acknowledged and addressed within an appropriate timescale. Therefore, the warning letter will outline what steps the business needs to take to address the breaches identified and the timeframe for dealing with them. It must also specify the relevant period of the contravention(s) covered by the warning letter, see ECSH 82850. Where breaches have been identified an advice letter should not be issued.

If a business has previously received a warning letter and a further intervention identifies the business is still non-compliant with its obligations under the MLRs a further warning letter would not normally be an appropriate response to the non-compliance.

Warning Letters may be appropriate to remedy minor breaches in relation to:

• risk assessment
• policies, controls, and procedures
• customer due diligence
• record keeping
• training