Following a consultation last year on how money could be raised to fund the UK’s fight against economic crime, HM Treasury has published their plans and the draft legislation to bring the levy into force.

All entities subject to the Money Laundering Regulations (MLRs) and with UK revenue over £10.2m will be subject to the Economic Crime Levy (ECL). It is expected that ECL fees will be no more than 0.1% of an entity’s UK revenue. It will only be paid by medium (£10.2m-£36m UK revenue), large (£36m-£1bn), and very large (>£1bn) entities – exact turnover figures are yet to be confirmed.

Applied from 2022/23, the exact final fixed fees will be included in the Finance Bill. However, the ECL will be tapered according to the size of the entity and is likely to look like this:

• a medium-sized entity should expect an annual levy of between £5,000 and £15,000,
• a large-sized entity should expect an annual levy of between £30,000 and £50,000, and
• a very large-sized entity should expect an annual levy of between £150,000 and £250,000.

The government intends for the ECL to raise about £100m a year to help meet the costs of new and uplifted capabilities to tackle money laundering. 

ICAEW previously responded to HM Treasury’s consultation on the proposed levy and argued that the money raised must be spent on the right activities to effectively counter-economic crime and that the cost of the levy should not only fall on firms supervised by the largest professional bodies, such as ICAEW. In setting the £10.2m revenue threshold for the levy, HM Treasury will likely exempt most firms which are members of smaller professional bodies.

“Economic crime represents a significant threat to the UK, and we have long argued that our defences require greater funding and investment,” commented Michelle Giddings, ICAEW’s Head of AML and Operations.

“ICAEW’s member firms, along with the rest of the chartered accountancy profession, continue to play an active role in tackling money laundering. We are pleased that HM Treasury’s draft legislation includes many of the proposals that we supported in our original consultation response. Although we argued for solidarity in payment of the levy, we acknowledge the administrative burden of applying the levy to the entire regulated sector and accept the government’s decision to levy only the largest firms. 

“As a supervisory body we will support HMRC to collect the levy, so will now take time to review the draft legislation to ensure that the necessary provisions to share information with HMRC are included.” 

The deadline for response to the consultation on the draft legislation is Friday 15 October 2021, and the final legislation will be included in the 2021-22 Finance Bill, which will follow the Budget Statement on Wednesday 27 October.

The Economic Crime (Anti-Money Laundering) Levy draft legislation can be found here and the explanatory notes are here.

ICAEW’s full response to the consultation can be found here - Economic Crime Levy: funding new government action to tackle money laundering

For more information on Anti-Money Laundering see www.icaew.com/moneylaundering