Understanding HMRC’s Role in AML Supervision

What is HMRC AML supervision?

His Majesty’s Revenue and Customs (HMRC) Anti-Money Laundering (AML) supervision refers to the oversight provided by the authority under the Money Laundering, Terrorist Financing and Transfer of Funds (Information on the Payer) Regulations 2017 (MLRs). HMRC acts as a supervisory body, ensuring through its regulation, that businesses adhere to the rules designed to prevent money laundering and terrorist financing. This involves assessing risks, implementing controls and monitoring activities to prevent money laundering and terrorist financing.

The importance of countering financial crime risks has been highlighted by HMRC, stating that all firms must take steps to defend themselves against financial crime, with effective systems and controls to detect, prevent and deter.

Who needs to register with HMRC for AML?

Certain businesses must register with HMRC for AML supervision. This mandatory registration helps HMRC keep track of businesses that are at a higher risk of encountering money laundering activities and ensure that they follow the necessary legal protocols.

HMRC is the supervisory authority for:

  • Money Service Businesses
  • High Value Dealers
  • Trust or Company Service Providers
  • Accountancy Service Providers
  • Estate Agency Businesses
  • Art Market Participants
  • Letting Agency Businesses

How do you register with HMRC?

Prior to initiating the HMRC registration process, you need to ensure you complete an AML risk assessment and establish a framework of policies, controls and procedures to effectively manage and mitigate the risks identified. HMRC will reject the application if these are not in place.

It is crucial to gather and submit all necessary information as requested through an online form.

What triggers a HMRC compliance check?

Tasked with ensuring that businesses are properly supervised, HMRC may conduct visits to conduct compliance checks. Such visits and checks can often be initiated if information suggests that a business might be at risk of being exposed to or involved in money laundering activities.

How does HMRC check businesses registered for money laundering supervision?

HMRC maintains a Supervised Business Register which lists all businesses registered for AML supervision. To monitor compliance with the Money Laundering Regulations, HMRC conducts regular checks on registered businesses. These checks can include announced or unannounced on-site visits, where HMRC reviews the company’s AML procedures, employee training records and customer due diligence processes. They also ensure that businesses have proper record-keeping practices in place.

What happens if you do not register with HMRC?

A business must not trade without registering with HMRC under the regulations. Failure to register with HMRC for AML supervision may result in serious repercussions. Penalties can range from financial penalties to criminal charges, depending on the severity of the oversight. In June 2023, Xpress Money Services Ltd, was fined of £1.4 million for failing to carry out risk assessments, not having appropriate anti-money laundering controls, and failing to conduct proper due diligence checks.

How Complyport can help

Complyport has supported a number of firms with their applications for HMRC supervision including:

  • Conducting AML risk assessment
  • Conducting AML gap analysis
  • Drafting an AML policy
  • Managing HMRC registration process
  • Renewing firm supervision
  • Responding to HMRC enquiries
  • Preparing for HMRC visits

We have supported firms supervised by HMRC such as estate agents, lettings businesses, trust and company service providers, money services businesses, formation agents and art dealers.

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