Success As HMRC Penalty is Withdrawn | Money Laundering Regulations
All businesses must take active steps to prevent their services from being used to facilitate money laundering, and those operating within a regulated sector are required to implement and maintain effective anti-money laundering procedures.
If a supervisory authority is satisfied that a person or business has breached the Regulations, or has been knowingly concerned in a contravention, it has the power to impose a penalty.
In one such case, KANGS successfully secured on behalf of our client, a Money Service Business, the withdrawal of a significant financial penalty that HMRC had sought to impose for alleged breaches of Regulation 76 of the Money Laundering, Terrorist Financing and Transfer of Funds (Information on the Payer) Regulations 2017.
HMRC alleged that our client had failed to fulfil its due diligence obligations and to identify the risks of exposure to money laundering and terrorist financing.
Nazaqat Maqsoom of KANGS outlines how this excellent result was achieved.
The Circumstances
As part of its function as a Money Service Business, our client engaged several third-party agents to facilitate international money transfers between the UK and Pakistan, the latter being regarded as a high-risk jurisdiction for the conduct of money laundering activities.
HMRC took issue with the level of due diligence undertaken in the conduct of these transactions and as part of its investigation, proceeded to analyse business documents including Risks Assessments, Policies, Agent Reports and other financial material, as well as conduct site visits.
As the result of its investigation, HMRC alleged that a substantial amount of money had been exposed to a heightened risk of potential money laundering and terrorist funding caused by failures to conduct appropriate due diligence procedures.
Accordingly, HMRC imposed a financial penalty in respect of these alleged breaches which occurred between 2017 – 2019.
How We Secured the Withdrawal of the Penalty
Our client strongly denied the allegations stating that the analysis and investigation conducted by HMRC were inadequate and that its business model and procedures provided stringent due diligence compliance.
Having discussed with our client the options available to dispute the financial penalty, it was decided to request an Independent Review.
By way of preparation for such a Review, the team at KANGS:
- attended upon our client discussing in detail the nature and manner of conduct of their business, the due diligence procedures in place, and the potential reasons behind HMRC’s investigation,
- advised our client on the relevant law, regulations and procedure, the merits of the penalty imposed by HMRC and the potential grounds to overturn it,
- collated and carefully examined all necessary evidence required for consideration during the Independent Review,
- prepared and submitted our client’s Application for Review, liaised with HMRC throughout, and prepared our client’s detailed submissions,
- advised our client regularly as the matter progressed.
The Highly Successful Outcome
Following detailed consideration of the meticulously prepared evidence, it was determined, upon Review, that the imposition of the penalty was unjustified and it was withdrawn.
Our client was absolutely delighted with this outcome achieved our defence solicitors. Not only was the improperly imposed fine withdrawn but the threat of potentially damaging adverse publicity was avoided.
How Can We Assist You
If you or your business becomes subject to any form of HMRC investigation, it is essential that you immediately seek experienced legal advice. The team at KANGS has extensive experience gained from advising and representing clients involved in HMRC disputes of every nature.
If we can be of assistance, our team would be delighted to hear from you, simply contact us using the details below:
Tel: 0333 370 4333
Email: info@kangssolicitors.co.uk
We provide initial no obligation discussion at our three offices in London, Birmingham, and Manchester. Alternatively, discussions can be held through video conferencing or telephone.
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