MLR3C4200 - Our risk based approach to supervision: HMRC supervision: Our risk based approach to supervision: Introduction

In HMRC’s role as the supervisory body for a number of business sectors covered by the Regulations, we have an obligation to adopt a risk-based approach to monitoring and enforcement of businesses compliance with the Regulations.

In line with other MLR supervisors such as the FCA, HMRC will adopt the principles of good regulation in the Regulators Code. This can be found at https://www.gov.uk/government/publications/regulators-code

The fundamental principles are:

  • Regulators should carry out their activities in a way that supports those they regulate to comply and grow
  • Regulators should provide simple and straightforward ways to engage with those they regulate and hear their views
  • Regulators should base their regulatory activities on risk and should use comprehensive risk assessment to concentrate resources in the areas that need them most
  • Regulators should ensure clear information, guidance and advice is available to help those they regulate meet their responsibilities to comply.
  • The few businesses that persistently break regulations should be identified quickly and face proportionate and meaningful sanctions
  • Regulators should clearly explain what the non-compliance item or activity is, the advice given, actions required or decisions taken, and the reason for these

All Officers must remember that the purpose of their activity is to make sure businesses are complying with anti money laundering and terrorist financing legislation. This will also include making sure that businesses are:

  • not trading unsupervised/without registering with HMRC where appropriate
  • have put in place risk based anti money laundering policies and procedures and are following them
  • are making suspicious activity reports to NCA when required

Compliance activity must not be undertaken for any other purpose and officers must ensure that any details obtained at a visit are only used for a legitimate purpose.

(This content has been withheld because of exemptions in the Freedom of Information Act 2000)

This could be because it is being used by its customers and despite having reasonable grounds for knowledge or suspicion has not disclosed this to NCA or the business itself may have been set up to launder money. In both these circumstances HMRC must notify NCA promptly if they know or suspect money laundering.

An officer may know or suspect that a customer of the relevant business is engaged in money laundering when they are examining internal disclosures to the Nominated Officer (NO) to ensure compliance with the regulations. In this case providing the officer is certain that a SAR has been completed and submitted to NCA they should take no further action.

If the NO does not think that there are reasonable grounds for knowledge or suspicion and has not notified NCA, but the officer disagrees, the officer should ask the business to submit a SAR. (This content has been withheld because of exemptions in the Freedom of Information Act 2000) . Officers should however, be aware that there must reasonable grounds for knowledge or suspicion.