The UK Government recently introduced a new levy on the AML regulated sector to combat money laundering and economic crime. The levy will apply to many within the asset management sector including all firms that are categorised as investment firms under the Markets in Financial Instruments Directive. Read on for how it will affect your business.
The levy aims to raise £100 million each year to fund the government's new anti-money laundering and economic crime initiatives. The levy was introduced by the Finance Act 2022 and implemented by the Economic Crime (Anti-Money Laundering) Regulations 2022. The FCA on 30 November 2022 gave an update on the levy including how they propose to collect it.
Who is caught by the levy?
All entities that are subject to the Money Laundering, Terrorist Financing and Transfer of Funds (Information on the Payer) Regulations 2017, including financial institutions such as brokers, fund and portfolio managers and investment advisers unless exempt from the Money Laundering Regulations. The levy will be applied on an entity-by-entity basis.
Are there any exemptions for small businesses?
Yes. Businesses employing up to 50 people with UK revenue below £10.2 million are exempt.
When does the levy apply?
For the financial year 1 April 2022 – 31 March 2023.
When will the first payment be due?
After 31 March 2023 so in the next financial year.
How much is the levy?
There are four bands:
- less than £10.2 million – small firm
- between £10.2 million and £36 million – medium firm
- between £36 million and £1 billion – large firm
- more than £1 billion – very large firm
The exact fees for each band are:
- small firms to be exempt
- medium firms to pay £10,000
- large firms to pay £36,000
- very large firms to pay £250,000
The levy will be proportionately reduced where a business carries on a regulated business for only part of the levy year.
Who will collect the levy, and how?
For FCA supervised firms, the FCA. The FCA will collect data through a new regulatory return, accessed through their RegData system. Firms will need to file their return in April 2023. In most other cases, HMRC.
What are the sanctions for non-compliance?
Expected to be published before April 2023.
What do you need to do now?
If you think your business is within the scope of the levy, ensure that you have the appropriate systems in place to enable you to comply with the new rules. For further guidance please contact us.
What happens next?
The government expects to publish further provisions setting out the process for appeals, the enforcement framework and penalties before April 2023.
