MLR1PP8650 - Penalties Guidance: The additional starting penalty for TCSPs and ASPs: Introduction

The general principles to follow when calculating or making determinations of the additional starting penalty for TCSPs and ASPs are similar to those for MSBs and HVDs. There are however some significant differences because of the nature of these businesses. For TCSPs and ASPs the consequences of any breaches are likely to be that any potential money laundering will take place through their clients businesses rather than directly through the TCPS or ASP's business. TCSPs and ASPs are primarily included in the Regulations because they are gatekeepers, not because they are a high risk of being used directly to launder money.

To ensure the size of any penalty is geared to the degree of risk that money laundering has taken place as a result of the breach, the size of additional penalty is linked to the number of clients the TCSP or ASP failed to monitor for MLR purposes and not the amount the TCSP or ASP received in fees for its services.

This means that unless the penalty framework is suspended the additional starting penalty for TCSPs and ASPs will be based on scale charges determined by the number of relevant clients, exposed by the breaches during the relevant period.

The majority of TCSPs and ASP who are regulated by us, rather than other supervisory bodies, will tend to have a relatively large number of clients and will charge a standard range or scale of fees rather than a bespoke fee for an individual service. There is no direct correlation between the fee a TCSP or ASP is paid for their services and the amount that could potentially be exposed by failing to apply the Regulations to their clients. The more clients a non-compliant business has, the greater the opportunities will be for money laundering to take place. It is an important point to remember that the risk of money laundering is in relation to the activities carried out by the client, not the TCSP or ASP.