Regulation

UK Tax Authority Increases Money Laundering Fines

The U.K. tax authority has almost doubled the fines it hands out for money laundering rule violations in the most recent financial year.

According to the Financial Times, HM Revenue & Customs (HMRC), one of 27 organizations that oversees compliance with anti-money laundering regulations, fined companies £2.3 million in 2017-18, an increase from £1.2 million a year earlier.

The rise comes as HMRC actually reduced the total number of penalties it handed down to 655, from 901 a year earlier, which resulted in the average fine more than doubling as it focused on fewer, but more complex breaches.

HMRC oversees businesses including accounting firms, estate agents and dealers in luxury goods.

But anti-corruption advocates said the fines were not enough to ensure companies did not facilitate money launderers, who move an estimated £90 billion in corrupt money through the U.K. each year.

“Whilst it is encouraging to note that in the past year fines dished out by HMRC for [money laundering] offenses have increased, this still only averages out at less than £3,500 per breach . . . it would seem that such fines offer little deterrent against money laundering failings,” said Rachel Davies Teka, head of advocacy at Transparency International UK.

HMRC disagrees, noting that “our financial penalties have doubled in value over the last three years as we have taken more robust action and tackled increasingly complex and high-risk cases.”

Transparency International added that real estate businesses should be a focus for HMRC.

“The property sector faces some of the highest money-laundering risks,” said Davies Teka. “We have identified £4.4bn worth of property across the UK we consider to have been bought with suspicious wealth.”

HMRC does not handle measures to fight money laundering through banks, but it does supervise money service businesses, such as bureaux de change.

Its chief executive Jon Thompson told the Commons Treasury select committee last month that it planned to investigate other organizations that might be better able to take over its anti-money laundering responsibilities.

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