ECSH81100 - Regulation18(4) concession

ECSH81100 바카라 사이트� Regulation 18(4)concession

聽of The Money Laundering, Terrorist Financing and Transfer of Funds (Information on the Payer) Regulations 2017 (MLR 2017)聽requires a聽relevant聽business to maintain an up-to-date written record of the steps it has taken to comply with regulations 18(1) to (3)聽MLR 2017聽which relate to the requirement for聽a聽relevant聽business to complete a risk assessment.聽

MLR 2017 also allows a supervisory authority to waive the requirement to keep such a written record, and to give notice to the聽business聽of that decision in writing. This is聽referred to as聽바카라 사이트渢he regulation 18(4) concession바카라 사이트�.聽聽

Regulation 18(5) MLR 2017 states that the supervisory authority may not聽grant a regulation 18(4)聽concession聽unless it considers that the risks of聽money laundering and terrorist financing聽applicable to the sector in which the business聽operates聽are clear and understood聽by the business.聽聽聽聽聽聽聽

When can the concession be granted?聽

The regulation 18(4) concession may only be granted to聽businesses聽who can satisfy聽all the following requirements:聽聽

  • Can聽demonstrate聽a thorough and detailed understanding of the聽money聽laundering/terrorist聽financing(MLTF)聽risks to which they are exposed.
  • Must be a sole trader.
  • Does not work in/with,聽or is exposed to, any higher risk context or customers.聽聽Such as, dealing with high risk third countries, or politically exposed persons (PEPs).
  • Is not a complex business in nature (dealing with complex or unusual transactions) or structure.聽
  • Does not handle any cash.聽
  • Is a business of a type whose circumstances and dealings rarely change or vary.聽
  • Can聽demonstrate聽a good standard of compliance with MLR 2017, in all other obligations.聽
  • Has not been found to be in breach of MLR聽2017.聽
  • Does聽not have any unspent聽convictions聽for relevant offences under schedule 3聽MLR 2017 (where a beneficial owner,聽officer聽or manager (BOOM)聽of the business has an unspent conviction for a relevant offence under schedule 3聽MLR 2017 the BOOM cannot be聽approved,聽and聽any approval granted is automatically invalidated).聽
  • Is not a new business, which has not undertaken a risk assessment and cannot聽demonstrate聽a clear and detailed understanding of risk.聽

No聽concessions聽have been granted聽to聽date;聽therefore,聽all existing聽supervised聽businesses should already have a written risk assessment in place,聽to聽comply with聽MLR 2017.聽聽

We should not聽grant the regulation 18(4) concession to any business聽already registered with HMRC,聽which does not have an existing written risk assessment. This would mean they have been in breach of regulation 18(4) MLR 2017 from at least聽the date of their registration or聽1st January 2018 (the date from which HMRC started to take enforcement action)聽or the date they began undertaking relevant activity聽if聽they started trading after this date. To do otherwise risks granting the regulation 18(4) concession to businesses which are simply trying to avoid having to create one. However, this should not prevent a newly registered, low-risk, and compliant business from seeking a concession under regulation 18(4) MLR 2017.聽

Businesses that do not meet the requirements above聽cannot benefit from the regulation 18(4) concession.聽

In addition:聽

  • This should be a concession only used in limited circumstances where businesses meet聽all聽the relevant criteria and should only be granted with care.聽
  • It may only be granted in response to a formal request by a聽business聽(it must not be granted by聽HMRC聽without a formal request).聽
  • A聽business聽who is or has been carrying out relevant activity but聽does not have the required written聽risk assessment聽should be considered as being in breach of MLR聽2017聽unless they can produce written confirmation from聽HMRC聽that the concession was granted 바카라 사이트� and that this can be confirmed by聽HMRC바카라 사이트檚 own records.聽
  • HMRC聽will, in writing, withdraw a previously given concession if the聽businesses바카라 사이트櫬燾ircumstances change in such a way that any of the criteria listed above no longer apply.聽

With regards to聽the聽qualifying criteria, where a business has previously been warned or sanctioned for not having a written record of their risk聽assessment,聽they should not usually be granted a concession under regulation 18(4) MLR 2017.聽

To what does the concession apply?聽

The risk assessment referred to in regulation 18(1) MLR 2017, and to which the concession in regulation 18(4) MLR 2017 applies,聽requires a聽relevant聽business to聽take into account聽all the elements listed in regulation 18(2)(a) and (b) MLR 2017, and any further factors which the business has considered over and above the regulation 18(2) MLR 2017 list.聽

The factors set out in regulation 18(2) MLR 2017 that must be聽taken into account聽are as follows:聽

  • Information made available by HMRC as supervisory authority under regulations 17(9) and 47 MLR 2017.聽
  • Risk factors including factors relating to:聽
    • Customers of the business.聽
    • Countries or geographical areas in which the business聽operates.聽
    • Products or services offered by the business.聽
    • Transactions carried out by the business.聽
    • Delivery channels used by the business.聽

If聽HMRC聽is concerned聽that聽the MLTF risk will be increased聽by the business not聽maintaining聽an up-to-date written record of any of these factors, then the regulation聽18(4) concession should not be granted.聽

Operational considerations聽

When writing to inform a聽business聽of our decision聽to grant the concession, we should make clear that they should regularly review whether all the requirements listed聽above聽continue to be met. The letter should explain that聽if聽one or more of the requirements is no longer met, the business must聽immediately聽re-assess and document its risks, then update its policies,聽controls,聽and聽procedures聽as necessary. They should also write to inform HMRC that the concession is no longer applicable.聽

When writing to inform a business聽that we will not be聽granting聽the concession, we should make聽our reasons for that decision clear.聽聽

HMRC聽needs to record which聽businesses聽have been granted聽and refused聽the regulation聽18(4)聽concession.聽Checks need to be undertaken聽at suitable intervals on businesses聽which have been granted the concession聽to ensure that the regulation 18(4)聽MLR 2017 criteria still apply.聽 We might also wish to consider 바카라 사이트�nudge바카라 사이트� interventions such as occasional emails reminding the business of the importance of reviewing whether the regulation聽18(4) MLR 2017 criteria still apply.聽

HMRC聽should not,聽and聽cannot,聽impose any form of sanction on a business for聽failing to keep聽a written record of an MLTF risk assessment when the concession has been given, unless the business no longer meets the criteria above and have failed to notify HMRC of the change.聽

The聽decision聽whether or not聽to grant a concession聽is not appealable 바카라 사이트� regulation 18(4) MLR 2017 decisions are not聽included聽in the list of appealable decisions聽within聽聽MLR 2017 - see聽ECSH90000.聽

Who should make the decision about whether the concession applies or should be removed?聽

Whether a聽business聽should be granted the regulation聽18(4) MLR 2017 concession is an operational decision.聽Responsibility聽for the decision, of granting, or removing, the concession sits with the Grade 7 compliance leads, although the Economic Crime - Supervision risk and intelligence team should also be consulted on the decision.聽

Removal of the concession where it has previously been granted is an operational decision, and consideration towards this course of action could be made when the聽business聽is unable to聽demonstrate聽a sufficient understanding of risk. Removal of the concession must be confirmed in writing, and the business, will, from that point, need to revert to聽maintaining聽a written聽record of its MLTF risk assessment. A reasonable deadline should be provided for the business to聽comply with聽regulation聽18(4) MLR 2017 requirements.聽It is an operational聽decision as to whether the officer would want to review the聽risk assessment.聽