The cost per fine that Her Majesty’s Revenue and Customs (HMRC) is imposing on dealers in luxury goods such as art, antique and private jets has more than doubled in a year, an anti-money laundering and Big Data expert has disclosed.
The average penalty issued by HMRC rocketed 166% from £484 to £1,290 in 2016/17 as the number of fines overall dropped 23% from 1,153 to 886, said specialist Fortytwo Data.
The total value of fines rose 105% from £558,000 in 2015/16 to £1,143,000 in 2016/17, it stated.
HMRC oversees dealers that specialise in in luxury jewellery, art, antiques, boats, cars and even private jets as part of its anti-money-laundering (AML) remit.
That remit sees HMRC supervising sectors that include money service providers, luxury goods dealers, trust or company service providers, unsupervised accountancy service providers and estate agents.
The department is tasked with ensuring that players in these sectors meet their AML obligations, and have the powers to issue fines when the are deemed not to have done so.
These business, as well as banks and other financial service firms, should file Suspicious Activity Reports (SARs), to raise red flags over possible criminal activity but reporting is still very low.
There were only 45 SARs filed by high value dealers in 2016/17, states Fortytwo Data, while auction houses submitted just nine. Estate agents registered 536 and trust/company service providers filed 72, says the research company.
Fortytwo Data chief executive Julian Dixon, pictured left, said that he hoped that the “dramatic rise” in the value of fines was a sign that HMRC is “getting tough on the weak links in our money-laundering defences”.
High-value dealers and those handling large transactions, particularly in unregulated industries, were a “money-launderer’s dream”, he said.
“Awareness of money laundering risks will be low, profits are high which encourages those who are suspicious to turn a blind eye and criminals are able to launder huge amounts of money in a single, seemingly innocuous, transaction,” Dixon added.
“Businesses who ignore their money laundering responsibilities should not expect a light touch.
“If HMRC has been an effective AML supervisor during this period, then the fall in the number of penalties issued is also encouraging and may demonstrate their tactics are working.”
