MLR1PP10250 - Penalty Guidance: Breaches which will be treated as mistakes

It is not possible to describe every set of circumstances when a breach of the Regulations should be treated as a mistake. The following are examples of where a breach, unless there are aggravating circumstances, should be treated as a mistake. Under these circumstances issuing a penalty warning or a penalty reduced to nil is the most appropriate action, unless the failing led to a breach which had a serious money laundering impact.

• Very minor failings, without an obvious pattern, which relative to the size or scale of the business are most likely to be a result of human error
• Breaches that have had little or no impact in terms of exposing the business to money laundering or terrorist financing
• The first time a business, previously registered with us under MLR 2003, fails to comply fully with some of the new requirements of the 2007 Regulations, which they do not understand.
• A new business, previously not required to be registered with us, who fails to comply with a single, or closely related requirements of the 2007 Regulations because they did not genuinely understand the Regulations (We will need to see evidence that in general an attempt was made to comply but the wrong steps were taken)
• A business who has a policy and process in place to enable it to comply with the new requirements of the 2007 Regulations but has not, despite good intentions, fully implemented this process by the time of a first Compliance Visit. The business will need to show that it is taking steps to become compliant
• A business who was not required to register with us under the 2003 Regulations but which is required to register under the 2007 Regulations belatedly discovers that it should have been registered with us. The business will need to be able to demonstrate the reasons why it was not aware of the requirement to be registered
• A minor error or misunderstanding in interpreting the advice we have given in a warning letter or at a Compliance Visit where in general the business is able to demonstrate to us that there has been a clear attempt to correct the weaknesses which were identified