AMLG1300 | Guidance for all sectors: Civil Penalties and Criminal Prosecution

3. Civil penalties and criminal prosecution

If a person contravenes a relevant requirement imposed on that person under the Regulations, there are a range of measures, as set out below, that may be taken by HMRC which include imposing a civil penalty or pursuing a criminal investigation which, if prosecuted and convicted, could result in an unlimited fine and/or a prison term of up to 2 years.

HMRC recognises most of the businesses we supervise aim to comply with the regulations. The ability of HMRC to take action against the minority that do not comply, however, is an important deterrent and incentivises businesses to comply. The Regulations give HMRC the power to impose penalties and take other measures to tackle non-compliance including:

Imposing a financial penalty
Imposing a prohibition on management
Publishing a censuring statement
Undertaking a criminal investigation
Suspending or cancelling registration

These are set out in more detail below:

Financial penalty

The penalty that HMRC imposes must be appropriate for the contravention which means it must be at a level that HMRC considers is effective, deters non-compliance, both to the business and the wider sector, and is proportionate.

The amount of the penalty will be determined taking into account all the relevant circumstances of the case including where appropriate the following:

Degree of responsibility.
Reason for non-compliance.
Seriousness of the offence.
Level of cooperation with HMRC.
Period over which the non-compliance took place.
Compliance history of the business.
Relative size and financial strength of the business.
Benefits received, or losses avoided, by the business from the non-compliant activity.
Consequences of the non-compliance and the amount exposed to the risk of money laundering or terrorist financing.

HMRC will allow reductions to a penalty imposed for non-compliance when you make an unprompted disclosure that you have breached the Regulations, and/or you cooperate fully with HMRC. An unprompted disclosure is when you report to HMRC that you have breached the Regulations before HMRC contacts you for any type of enquiry or intervention. We encourage businesses to contact HMRC to report breaches of the regulations. You can make a disclosure to HMRC by emailing [email protected].

Further guidance on how HMRC calculates a financial penalty can be found here.

Prohibition of management

This involves imposing a temporary or permanent prohibition on individuals from having a management role in any supervised business in any sector if they were officers of the business at the material time of the contravention and were knowingly concerned in the non-compliance (see AMLG1400 for guidance on the meaning of knowingly concerned).

Publish a censuring statement

This is a formal published statement of disapproval issued where a business has contravened the Regulations, which may include publication of the details of each contravention.

Criminal investigation

Contravening a relevant requirement under the Regulations is a criminal offence. Whilst HMRC may deal with contraventions of the Regulations by way of a civil penalty, where appropriate, HMRC may pursue a criminal investigation against the person and/or business upon whom the relevant requirement was imposed.

Other measures available

HMRC also has the power to take other measures which may be utilised in the event of non-compliance with the Regulations, depending on the circumstances, as follows:

Suspend your registration which prohibits you from trading in the relevant activity during the period of the suspension.
Cancel your registration.
Applying to the Court for an injunction to stop you from contravening the Regulations or requiring you to remedy any contravention that you have committed.

HMRC must publish details of penalties and sanctions issued (subject to certain exceptions).

You can find information on the penalties HMRC can issue in the following published guidance.