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British £10 and £20 polymer pound notes in a bowl of water AccountingWEB Accountancy firms stung in HMRC's £32m money laundering fines
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Accountancy firms stung in HMRC’s £3.2m money-laundering fines

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HMRC has fined businesses a total of £3.2m for breaching anti-money laundering regulations, with accountancy service providers footing almost £600,000 of those penalties.

12th Jun 2023
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Of the 240 supervised businesses named by HMRC this week that were fined for breaching anti-money laundering (AML) regulations between 1 July and 31 December 2022, 83 were accountancy service providers (ASPs). 

HMRC hit money service business Xpress Money Services Ltd with the largest fine of £1.4m for failing to carry out risk assessments, not having the correct policies, controls and procedures, and not conducting proper due-diligence checks.  

Accountancy service providers hit with fines

While escaping a fine as large as Xpress Money Services, Glasgow-based KJM Accountancy Limited was handed the biggest penalty of all the ASPs of £15,600. 

Relatus Limited was the recipient of the second largest fine for ASPs of £14,000, followed by Romford-based Dunwells at £13,960. The other ASPs topping the table of biggest fines were Regency payroll at £13,700, Acumen Accountancy Services Limited at £13,300, Philip Binfield Taxation Services at £13,200. 

The size of the fines for ASPs ranged from KJM Accountancy Limited’s £15,600 at the top of the table all the way to £1,500 for Plan It Tax Limited. 

In total ASPs received £393,650 of the almost £3m fines dished out between 1 July and 31 December 2022. Meanwhile, ASPs picked up £184,722 of the fines from 1 April 2022 and 30 June 2022. 

Regulation 56

In every case, the ASPs were fined for breaching regulation 56 – failing to apply for registration at the required time.

AML expert David Winch, the director of MLRO Support Limited, said that regulation 56 effectively means that you cannot practise as an “external accountant” unless you are either (a) supervised for AML by one of the recognised professional bodies, or (b) supervised for AML by HMRC.

Winch said that in normal circumstances then you would expect the majority of firms in practice as an “external accountant” in the UK to be representing clients in relation to their tax affairs – and in that context registering with HMRC as a tax agent. 

“It should be a simple matter – one would think – for HMRC to check that every tax agent listed with them is supervised for AML either with one of the professional bodies or with HMRC itself.

“It seems that, in almost every case, these penalties are for acting as an ‘external accountant’ while unregistered. 

“Very few penalties appear to have been visited upon firms who are registered with HMRC but are not fully complying with obligations such as having an appropriate policies and procedures document, a firm-wide risk assessment, having staff trained in AML, conducting appropriate CDD [customer due diligence] on clients and undertaking client risk assessments.” These would not be breaches under regulation 56 they would, for example, be breaches under Regs 18, 19, 24, 27 or 28.

He added, “So this information does not indicate to me that in 2022 HMRC was being particularly active in checking the quality of AML compliance by the ‘external accountant’ firms who were registered with them. Maybe HMRC is going to get around to that later.”

Along with ASPs – which consist of auditors, accountants, tax advisers, payroll agents and customs practitioners – HMRC also regulates estate and letting agent businesses, trust or company service providers, and money service providers. 

Money-laundering scrutiny

The list of fines from HMRC for money-laundering breaches comes as the government and professional bodies are stepping up their AML supervision. 

Unlike the other supervisory bodies, HMRC is not supervised by the Office of Professional Body Anti-money Laundering Supervision (OPBAS), which supervises the supervisors. OPBAS recently told the professional bodies to “step up their efforts as the first line of defence against AML threats”. This has resulted in increased scrutiny of accountancy firms’ AML procedures and processes. 

Professional bodies have also increased the value of fines for breaches of money-laundering regulations, with the total sum of fines issued in 2021/22 from these bodies doubled compared to the year before. 

As documented in the Treasury’s 2022 review of the UK’s AML/combating the financing of terrorism (CFT) regulatory and supervisory regime, the Institute of Chartered Accountants in England and Wales (ICAEW) fined firms a total of £267,002 from 53 fines, dwarfing the £178,947 from 59 fines in the prior year. 

Of the businesses that were fined between 1 July and 31 December, 219 are in England – with 86 based in Greater London – while 12 are in Northern Ireland, six in Wales and three in Scotland. 

Commenting on the fines, Nick Sharp, HMRC’s deputy director of economic crime fraud investigation service, said: “Serious and organised crime costs the UK billions of pounds every year and our anti-money laundering supervision is a vital tool in combatting that.”

Replies (6)

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By Hugo Fair
12th Jun 2023 15:07

"HMRC has fined businesses a total of £3.2m for breaching anti-money laundering regulations, with accountancy service providers footing almost £600,000 of those penalties" ... is a bit naughty (as in doubly mis-leading), Richard.

* the £3.2m total quoted by HMRC is actually £2,976,185 for the "240 supervised businesses named by HMRC as fined for breaching AML regulations between 1 July and 31 December 2022" ... to which they've quietly added "another 179 (unnamed) companies received smaller fines totalling more than £200,000 for rule breaches".

* the 'almost £600,000' attributed to accountancy service providers is actually 'only' £393,650 (at avg of £4,743) for the 83 named ASPs -as I see you've picked up later in the article - but has been plumped up by someone adding to it figures from a different period.

So the inference that ASPs were fined £600k out of a total £3.2m .. is actually £394k out of £2.9m (so closer to 13% rather than nearly 20% of those fines).

This might seem like footlin' criticism, but playing fast and loose with statistics is what HMRC do all the time (and is a bugbear of mine) ... so I prefer not to see Aweb adding to the confusion.

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By johnthegood
12th Jun 2023 15:51

He added, “So this information does not indicate to me that in 2022 HMRC was being particularly active in checking the quality of AML compliance"

As I suspected all along, you are far more likely to be put through an enquiry and hauled across the hot coals if you are supervised by a PB than by HMRC, another reason why I wonder if I should ditch the PB

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Replying to johnthegood:
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By bendybod
13th Jun 2023 10:19

My anecdotal experience is the opposite. I know people who have had HMRC knocking on the door but not any of my PB regulated friends. So I wouldn't go ditching your PB too quickly. Admittedly it wasn't in the period in question.

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Replying to bendybod:
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By Hugo Fair
13th Jun 2023 11:14

Also only anecdotal ... it looks like PBs carry out fewer reviews but in much greater depth (aka ways to trip you up) than HMRC; whereas HMRC are starting to tread their typical path to 'automation' (so more reviews but only a fairly shallow skim).

Hence the stats above which are almost entirely about failing to register (not subsequent operational performance).

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Peter Hall
By peter__hall
13th Jun 2023 10:11

So HMRC "supervises" us...surely a euphemism. HMRC controls, not supervises.

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By tedbuck
13th Jun 2023 10:36

The cynical outlook on this is that HMRC have given up on collecting the 'proper amount of tax' and think that whacking out fines is an easier way to get money in. AML, MTD and so on plus , of course, HMG with GDPR and anything else they can think of . I've heard it suggested that you will shortly need a licence to break wind in public. That should be amusing in the 'courts' just like Boris's kangaroo court. You are guilty before you step through the door. I still think the HMRC hierarchy should be sacked for gross incompetence. What was it £1.62 billion?

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