ECSH85650 - Appropriateness review
Regulations 76 and regulation 83 of the Money Laundering, Terrorist Financing and Transfer of Funds (Information on the Payer) Regulations 2017 (MLR 2017) require penalties to be appropriate (that is effective, dissuasive, and proportionate), but it is good practice to undertake this review for all sanctions being considered or applied. This must be recorded in the decision and evidence log (DEL). Further guidance on the decision and evidence log is available in ECSH34015. This must be done in all cases where a sanction is proposed as this allows better case governance and helps you to explain how you made your decision, particularly if the decision is challenged.
The appropriateness review is carried out to ensure that the sanction being proposed, including the amount of any penalty, is the most appropriate outcome of an intervention, particularly where breaches of MLR 2017 are identified. This includes sanctions but may also result in a warning letter or no further action being taken. The review should consider the full range of actions available and also explain why some outcomes are not appropriate.
When imposing a penalty, the appropriateness review should not only cover why a penalty is the appropriate outcome, but also why the amount of the penalty being charged is appropriate, considering all the facts of the case. The appropriateness review is not limited to whether the business can pay the penalty. Following the framework, adjustments can be made to the penalty calculation following the appropriateness review. The outcome of the appropriate review could result in the penalty calculated under the framework being increased or reduced. It is important that all factors present in the case and fully considered and captured in the appropriateness review.
Where a business is linked to other entities, the caseworker must fully explore the relationship, to understand what impact this has on the proposed sanction(s). These considerations must be recorded in the appropriateness review.
When a business is able to provide evidence confirming that it has taken reasonable care and exercised all due diligence, we must not impose a sanction. Further guidance on financial penalties is available in ECSH82525. While usually such circumstances will have been established during the initial engagement with the business, if a business makes such a claim after the decision to impose a sanction has been reached, it should be explored fully. Where a business changes its position with regard to information which had already been provided in order to make such a claim, it must be challenged and tested. Where a caseworker decides there is sufficient evidence to show that this is not the case, a narrative should be included in the letter/notice, with supporting evidence.
When citing that a business should have been aware of a relevant requirement and therefore the proposed sanction is appropriate (for instance where a business is a member of an organisation and that organisation has stated on their website that businesses need to register with HMRC for AML supervision), it is important to include the date on which that information was available to them from the organisation’s website. See ECSH85575.
(This content has been withheld because of exemptions in the Freedom of Information Act 2000)