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FOI request shows HMRC failing to crack down on money laundering

08/04/2019
Statistics obtained by European law firm Fieldfisher through a Freedom of Information (FOI) request indicate that HMRC is failing in its aim to reduce incidents of money laundering in the UK...

Figures show that between 2012-13 and 2017-18, HMRC conducted fewer than 55 investigations for breaches of the UK's Money Laundering Regulations (MLR), and that fewer than 25 prosecutions were brought.

That means that either there have only been a handful of breaches during this period, or that HMRC has failed in its obligations to bring action for breaches of the MLR.

The first explanation seems unlikely.

Under the MLR, it is criminal offence to contravene a relevant requirement, for example, failing to implement regulation-compliant anti-money laundering (AML) policies, controls and procedures.

It is hard to believe that only 20 or so of the thousands of businesses supervised by HMRC have not been fully compliant with all aspects of the MLR.

This notion is particularly staggering, as that the National Crime Agency estimates that tainted funds flowing into the UK amount to £90 billion annually.

Averaging about four prosecutions a year sits uneasily with laudatory government press releases commending a "crackdown" on money laundering, when evidently the problem still exists on a colossal scale.

Until HMRC's words are backed up with meaningful actions, questions will remain about the government's competence to tackle money laundering

 

Background

On 4 March 2019, HMRC announced its intention to crack down on money laundering, particularly in the estate agent sector.

Economic Secretary to the Treasury, John Glen, stated in a communication published on HMRC's website that:

"Money laundering regulation exists to help protect honest business, so anyone who flaunts the law should know that swift action will be taken."  

Under the UK's Money Laundering Regulations (the Money Laundering, Terrorist Finance and Transfer of Funds (Information on the Payer) Regulations 2017 and its predecessor, the Money Laundering Regulations 2007) ("MLR"), HMRC is responsible for supervising over 27,000 businesses in seven sectors, including high value dealers, estate agents and money service businesses not supervised by the FCA.

HMRC is responsible for ensuring that the businesses they supervise comply with the MLR and it is HMRC's responsibility to investigate any breaches and ensure that action is brought accordingly.

The FOI request was made by Francesca Titus, a partner in Fieldfisher's corporate crime team and Kyle Phillips, a senior associate in the corporate crime team.

 

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