The FCA will begin invoicing for the Treasury’s new Anti-Money Laundering levy from July, with some large firms expected to pay £250,000 per annum.
The Economic Crime Levy (ECL), as it is officially called, will be imposed on companies supervised under the Money Laundering Regulations (MLR) whose UK revenue exceeds £10.2m per year.
Most small firms under this threshold will be exempt but may need to register under the new rules.
Financial Planning Today understand that about 20,000 regulated firms will be covered by the levy, about a third of the total. However, only about 10% of these firms – about 2,000 with revenues above £10.2m – are expected to have to pay the levy. Financial advice firms will be covered by the levy if they are of sufficient size.
The Government says the money raised by the levy will be used to fight economic crime, including money laundering abuses, funding for terrorism and illicit transfer of funds.
The levy will be collected for the Government by HMRC, the FCA and the Gambling Commission.
The levy will apply to AML-regulated businesses including:
- credit institutions
- financial institutions
- auditors, insolvency practitioners, external accountants, and tax advisers
- independent legal professionals
- trust or company service providers
- estate and lettings agents
- high value dealers, casinos, auction platforms and art market participants
- crypto asset exchange providers and custodian wallet providers
The FCA says that impacted firms (those subject to the money laundering regulations between 6 April 2022 and 5 April 2023) will see the new levy appear on invoices from July.
The levy will be paid annually and will be determined by a firm’s UK revenue.
Impacted firms have been told to submit their data via new Reg Data Report (FIN074) from 1 April. A failure to submit in time may result in a £250 administrative fee.
Those firms registered as an Annex 1 financial institutions only will receive a letter to report their data.
The new levy is part of the Money Laundering, Terrorist Financing and Transfer of Funds (Information on the Payer) Regulations 2017.
Those firms which need to register under Annex I of the regulations include firms providing:
- lending including, among others, consumer credit, credit agreements relating to immoveable property, factoring with or without recourse, and financing of commercial transactions (including forfeiting). Consumer credit lenders must be authorised by the FCA and do not need to separately register with us for supervision under the Regulations
- financial leasing
- providing payment services
- issuing and administering other means of payment
- offering guarantees and commitments
- trading for own account or for account customers in any of the following:
- money market instruments
- foreign exchange
- financial futures and options
- exchange and interest-rate instruments or
- transferable securities
- safe custody services
- money broking
- portfolio management advice
- safekeeping and administration of securities
- participation in securities issues and providing services related to such issues (this will include registrars)
- advice to undertakings on capital structure, industrial strategy and related questions and advice and services relating to mergers and the purchase of undertakings
Businesses that need to register can do so using the FCA’s online system Connect.
The Treasury is using four size bands to divide firms:
- small (under £10.2m UK revenue)
- medium (£10.2m – £36m)
- large (£36m – £1bn)
- very large (over £1bn)
All small entities will be exempt from the levy, while medium entities will pay £10,000; large entities £36,000; very large entities £250,000.
• Editor’s Note: 11.15 am. Additional info added on how many firms will be expected to pay the levy.