Out-Law / Your Daily Need-To-Know

UK government to impose financial crime levy on regulated firms

Out-Law News | 05 Oct 2021 | 12:43 pm | 1 min. read

The UK Treasury has confirmed it is planning to impose a levy on firms subject to anti-money laundering (AML) regulations to fund the UK’s fight against economic crime.

According to draft legislation published in September 2021, firms subject to the Money Laundering, Terrorist Financing and Transfer of Funds (Information on the Payer) Regulations 2017 will pay an annual fixed fee, with the first payment due during the year 1 April 2023 to 31 March 2024.

The Treasury published its response to a consultation (54-page / 618KB PDF) on the design of the levy alongside the draft legislation. It said respondents to the consultation agreed an enhanced response to economic crime was needed, although some had reservations about the imposition of a levy.

Hamilton David

David Hamilton

Senior Associate

In some cases, the cost of the levy will represent a significant proportion of a company’s annual budget for AML and financial crime compliance

Respondents also agreed that proportionality, predictability, simplicity and cost-effectiveness were key core principles the government should consider when designing the levy.

The legislation will impose the levy in four bands depending on the size of the regulated firm. Small firms with UK revenue of less than £10.2 million will be exempt.
Firms with UK revenue of between £10.2m and £36m will face a proposed levy in the first year of between £5,000 and £15,000. Large firms, with UK revenue of between £36m and £1 billion, will have a levy of between £30,000 and £50,000.

Very large firms, with UK revenue in excess of £1bn, will face a levy in year one of £150,000 to £250,000.

These ranges will be replaced with a single figure for each band in the final legislation.

Regulators including the Financial Conduct Authority, the Gambling Commission and HM Revenue & Customs will be responsible for collecting the levy.

White collar crime expert David Hamilton of Pinsent Masons, the law firm behind Out-Law, said: “The levy amounts are surprisingly high. In some cases, the cost of the levy will represent a significant proportion of a company’s annual budget for AML and financial crime compliance.

“The revenue base calculation is to be applied across a firm’s entire UK business, and not just those elements that bring it within the scope of the MLRs. This has significant consequences for firms where regulated activity represents a small proportion of overall UK revenue,” Hamilton said.

The Treasury has published a short technical consultation on the contents of the draft legislation, which will run until 15 October 2021.


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