Common Questions About AML Non-Compliance

If you’ve received a notice from HMRC about AML (Anti-Money Laundering) non-compliance, it means your business may not be fully meeting the requirements of the Money Laundering Regulations (MLR).

This doesn’t always mean deliberate wrongdoing — but HMRC treats AML breaches very seriously, especially for accountants, bookkeepers, estate agents, and trust or company service providers.

Here are the most common questions people ask when they find themselves facing AML non-compliance issues.

What does AML non-compliance mean?

AML non-compliance means your business has failed to meet its legal obligations under the Money Laundering Regulations 2017.

Common issues include:

• Not being properly registered with HMRC for AML supervision
• Missing or outdated AML policies and risk assessments
• Failure to carry out Customer Due Diligence (CDD) checks
• Not keeping proper records of client identity and verification
• Missing staff training or incomplete procedures

Even if unintentional, these are still breaches in HMRC’s eyes and can lead to penalties or suspension from trading regulated activities.

Who needs to be AML compliant?

Any business operating in a regulated sector must comply with AML rules. This includes:

• Accountants and bookkeepers
• Tax advisers
• Estate agents and letting agents
• Trust or company service providers (TCSPs)
• High-value dealers
• Art market participants

If your business fits one of these categories and handles client money or forms companies, AML compliance is not optional — it’s a legal obligation.

What are the main causes of AML non-compliance?

Most AML breaches happen because of:

• Lack of understanding of regulations
• Missing risk assessment documentation
• Failing to update policies or refresh ID checks
• Not registering with HMRC before trading
• Poor record-keeping or missing training logs
• Using old verification data (e.g. expired passports)

Sometimes, businesses are registered but fail to update their details, which also counts as non-compliance.

What penalties can HMRC issue for AML breaches?

HMRC can apply a range of penalties depending on the seriousness of the breach:

• Minor errors: warning letters or small fixed penalties
• Failure to register or renew: penalties up to several thousand pounds
• Systemic or deliberate breaches: larger fines and possible criminal investigation
• Persistent non-compliance: suspension or cancellation of registration

HMRC also publishes the names of fined businesses on its website, which can seriously damage reputation — even for small firms.

What happens during an HMRC AML inspection or audit?

HMRC will contact you to arrange a compliance review. They may:

• Ask for your AML policies, procedures, and risk assessment
• Review a sample of your client files for proper CDD checks
• Request staff training records
• Check your registration and renewal status
• Verify your beneficial ownership and internal controls

They often issue a written summary of findings and a deadline to correct issues. Failure to act in time can lead to further action or fines.

How long does it take to resolve AML non-compliance?

The timescale depends on how serious the breaches are:

• Minor administrative issues: a few weeks to fix
• Missing policies, records, or risk assessments: 1–3 months
• Unregistered trading or repeated breaches: several months or more

Also, preparing documents and updating your AML framework takes time — especially if your records or staff training haven’t been maintained properly.

What should I do if I realise my business isn’t AML compliant?

Don’t panic — but act quickly.

1. Register (or renew) with HMRC if you haven’t already.
2. Prepare or update your AML policies, risk assessment, and procedures.
3. Carry out Customer Due Diligence on all existing and new clients.
4. Document everything — training logs, ID checks, ongoing monitoring.
5. Seek our professional help to correct gaps and respond to HMRC.

Voluntary correction and cooperation can often reduce penalties and prevent public naming.

Can AML non-compliance lead to a criminal investigation?

Yes — but usually only in serious or deliberate cases, such as:

• Operating a business while knowingly unregistered
• Helping clients conceal funds or avoid reporting requirements
• Fabricating documents or ignoring HMRC orders

Most AML issues are civil (administrative) and resolved through fines or warnings — not prosecution — if handled properly.

How can I prevent AML non-compliance in the future?

Prevention is always easier than correction. You should:

• Keep policies and risk assessments up to date
• Review all clients regularly (especially high-risk ones)
• Train staff annually
• Maintain detailed records for at least 5 years
• Keep proof of verification and ongoing monitoring
• Renew your HMRC AML registration on time

Having a clear, well-documented AML system protects both your business and reputation.

How can a compliance specialist help?

A professional adviser experienced in AML can:

• Review your systems for weaknesses
• Draft or update policies and risk assessments
• Train staff and record attendance
• Assist with HMRC registration or renewal
• Respond to HMRC’s findings or penalty letters

In short — they help you get back to compliance quickly, avoid penalties, and stay confident in meeting your legal obligations.