The Economic Crime (Anti-Money Laundering) Levy Regulations 2022 (‘Regulations’) came into force on 1 April 2022 and can be found here.
The purpose of the Regulations is to fund Government action to tackle money laundering and help deliver the reforms committed to in the 2019 Economic Crime Plan. As a result, relevant entities will be charged a levy for the year 1 April 2022 to 31 March 2023, with the first payment made in the year 2023/24. The levy applies to those entities who are supervised under the Money Laundering Regulations 2007(1) and whose UK Revenue is –
| Classification | UK Revenue (£) (F/Y) | Levy charged (£) |
| – | < 10,000 | Nil |
| Medium | 10.2m – 36m | 10,000 |
| Large | 36m – 1billion | 36,000 |
| Very large | > 1billion | 250,000 |
(see Part 3, Finance Act 2022)
In June 2022 a member of R3’s General Technical Committee brought the Regulations to the attention of members at a meeting of the committee. The member had particular issues with paragraph 15 of the Regulations as it stated that if an AML regulated entity goes into liquidation, receivership, administration then the office holder can be pursued by the appropriate collection authority for the outstanding levy. Although not specifically referenced in the Regulations, it is apparent that, in the context of bankruptcy, a trustee would be considered to be acting “in an equivalent capacity“.
Consideration did not appear to have been given as to whether this levy related to a pre appointment or post appointment period, so in effect would make the office holders personally liable for the levy. The R3 Technical Team immediately sought clarification from HMRC on the office holder’s position as to the payment of the levy in an insolvency process.
It is understood that the issue raised by R3 had not been considered by HMRC or the drafters of the Regulations and despite persistent chasers for clarification, no update was provided until recently. Amendments to the Regulations were brought before UK Parliament and came into effect from 28 March 2023 – see Regulation 10 of The Economic Crime (Anti-Money Laundering) Levy (Amendment) Regulations 2023. The amendments –
(i) clarify the treatment of the levy pre and post appointment, and
(ii) also require the continued disclosure of information or documentation to the collection authorities and require records to be kept during the relevant insolvency procedure in accordance with Finance Act 2022.
Consideration by R3 members
The amendments make it clear that any levy due in accordance with the Regulations on pre-appointment revenue remains payable by the insolvent company or individual (as a creditor). Any levy due post-appointment will be an expense of the insolvency.
In accordance with section 58(1) of the Finance Act 2022, “The [pre-appointment] levy is recoverable as a debt due to the Crown” but does not fall within the category of preferential debts.
The post-appointment levy will rank as a necessary disbursement (2) or expense (3) in each procedure’s order of priority. Members will therefore need to consider whether the Regulations apply and ensure that the levy is included in any post appointment/trading considerations.
The levy will be collected by 1 of 3 collection authorities:
- the Financial Conduct Authority (FCA) – Read more
- the Gambling Commission (GC) – Read more
- HMRC – Read more
Note also that office holders have a duty to “satisfy the requirements of Part 3 of the Act” (Finance Act 2022)(4). These requirements apply to pre and post-appointment trading periods and therefore returns are required to be submitted to the relevant collection authority. There is no carve out for companies or individuals subject to an insolvency in this regard.
The Regulations fail to mention the position of a Nominee/Supervisor of a Voluntary Arrangement (individual/company/partnership). We do not believe the Regulations would apply to a Nominee/Supervisor based on our interpretation of the Regulations. However, should you be dealing with an AML Regulated entity/person that is considering a Voluntary Arrangement, you may wish to seek legal advice on the matter.
(2) R3.51(2)(g) of the Insolvency (England & Wales) Rules 2016 (Link)
(3) R3.51(2)(a) of the Insolvency (England & Wales) Rules 2016 (Link)
(4) Part 3 ‘Economic crime (anti-money laundering) levy’ Finance Act 2022 (Link)