Penalties for AML Failures, levied by HMRC

This was supposed to be a ‘hot off the press’ article a few weeks ago, but time ran away with itself. We hope there is something here of interest for the readers. We have analysed HMRC’s published list of almost £4 million in penalties for AML failures on businesses meeting obligations under the Money Laundering Regulations 2017, over the 2023 – 2024 reporting period.

As one of the many supervisors of the regulations, which came into effect on 26 June 2017, HMRC publish details of businesses in their purview with AML failures. Click here for the raw data on penalties for AML failures.

HMRC make a point by highlighting that:

the published person/business may have changed their behaviour since
the published person/business may no longer be based at the published address, which is the one they registered with HMRC for Anti-Money Laundering supervision
the person/business currently at the published address may have no connection with the published business
the person/business currently at the published address may have the same name as the published business but could be under new, and completely different, management

Please see our accompanying analysis/summary of the penalties for AML failures charged. We tried to identify the types of businesses HMRC supervised (so its not all of them out there by a long mile) who have been penalised for their failures.

Currently, the UK AML supervisory system is made up of three statutory supervisors:

the Financial Conduct Authority,
the Gambling Commission, and
HM Revenue & Customs.

Also, 22 professional body supervisors who supervise the legal and accountancy sectors.

Their role is to ensure businesses comply with the regulations, and take enforcement action if the regulations are breached, and ensure only fit and competent individuals hold influential ‘management’ roles in the regulated businesses.

What did we find in the 2023-2024 data released by HMRC in January 2025?

There were c.680 penalties charged by HMRC for AML failures. We were not surprised to find that more than half of all those penalties were charged to Estate Agency Businesses (EAB), which includes Lettings Agents here. It is generally understood that agents can operate in this sector without any professional qualifications, which could be the reason for the regulatory breaches. For example, failures to identify and check clients’ identities and addresses, and more importantly, their sources of income and wealth.

We were shocked though, to see only 3 x Money Service Businesses and 12 x High Value Dealers on the list. Equally, only 15 x Corporate Service Providers had been penalised. We expected there to be more, but this is positive news and welcomed.

Remaining positive, we are sure businesses are in general doing more in this regulatory space. Registering sooner, getting better at recording comprehensive Customer Due Diligence records, and instilling robust AML policies and procedures for all their staff to follow. You can make your own mind up if you consider there are likely to be many more poor operators out there; not picked up by HMRC.

Here’s the breakdown:

ASP 191 (28%) ASP – Accountancy Service Providers

AMP 62 AMP – Art Market Participants

CSP 15 CSP – Corporate Service Providers

EAB 396 (58%) EAB – Estate Agency Businesses incl Lettings Agency Businesses

HVD 12 HVD – High Value Dealers

MSB 3 MSB – Money Service Businesses

We’re not sure what to make about seeing 28% of those penalties being charged to Accountancy Service Providers. Of course there ought not to be any on such a list, as they/we are professionals!

However, since they were not supervised by one of the professional accountancy bodies, because e.g. they were not ICAEW or CIOT members, does that mean HMRC are cracking the whip unnecessarily and being too harsh, or perhaps not giving these businesses enough attention and being too soft, or perhaps the businesses were comparatively less professional and experienced (smaller and/or naïve even)? We’ll leave that to you to ponder over. Penalties for AML failures are levied differently by different professional bodies.

Other interesting facts

The total penalties for AML failures on these businesses, during the period concerned, were £3,959,699.

However, one HVD, none other than “Harvey Nichols” it seems, received a £175,000+ penalty for multiple breaches; “… for failures in carrying out risk assessments, having the correct policies, controls and procedures, appropriate staff training, conducting due diligence, and record keeping.” Ouch!

After removing that business from the results, it seems the average penalty was c.£5,500 per business on the list.

Some 488 businesses were charged the average penalty amount or lower. With the lowest penalties being around the £1,000 mark.

After removing these which were the vast majority, we’re left with just 5 businesses being charged between £45,000 and £52,000. Also, there were none in the £52,000 to £175,000 range, therefore the Harvey Nichols penalty was an anomaly of sorts.

Of all the penalties charged on these businesses, only 7 appealed against the initial HMRC decisions. It’s not clear from the information published whether those appeals were lost completely or whether the penalty amounts charged were reduced to what we now see. They related to a mixture of breach types and different business types.

Lastly, almost all the penalties for AML failures were in relation to failing to register with HMRC at the right time and/or failing to provide the required information as part of registering for AML supervision.

How we can help?

We believe it’s in a client’s best interests to discuss AML compliance checks with an ‘independent specialist’ even if there are no failures to disclose. The right help at the right time ensures that HMRC are effectively managed and their AML compliance checks (not too dissimilar to tax compliance checks in practice) are concluded expeditiously. Ending up with penalties for AML failures is a choice, not inevitable.

Get in touch to learn more about how Amit and the Tax Investigations and Disputes team have successfully guided clients through the COP9 or COP8 investigation processes; see our tax investigations guide here.

See our large business/corporate enquiries guide here.

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Penalties for AML Failures, levied by HMRC