The Economic Crime Levy

The new Economic Crime Levy (ECL), which came into force on 1 April 2022, aims to raise approximately £100 million per annum to fund the government’s anti-money laundering initiatives. The levy will apply to firms that are subject to the Money Laundering Regulations and all professional services firms should therefore consider whether they now have new obligations to satisfy.

The Financial Conduct Authority and the Gambling Commission will collect the ECL where they are the specific anti-money laundering supervisor for an entity. HMRC will have responsibility for all other supervised entities, including most solicitors, conveyancers, and accountants.

The ECL will be an annual fixed amount based on an entity’s UK revenue for the accounting period ending within the year to which the charge relates, as follows:

Where a group exists, any group member that is within the ECL will need to register, file returns, and make payments separately. The revenue limits are adjusted for short accounting periods and the levy amount is adjusted when an entity is only supervised, for money laundering purposes, for part of the year.

For HMRC supervised entities, the first ECL payment and online return, relating to the year ended 31 March 2023 and based on the UK revenue for the accounting period ending within that year, will be due on 30 September 2023. Affected entities will therefore be required to do the following:

1. Register for the ECL. HMRC have introduced an online registration process, for which a Government Gateway account is required. Following registration, an entity will receive a unique ECL registration number to be used annually when reporting. Registration cannot be delegated to your accountant or tax agent. If turnover is below £10.2 million, an entity is not required to register.

2. Submit annual returns by 30 September. This will be done online and will include details of your relevant accounting period, your UK revenue for that period, and the relevant ECL band and levy amount.

3. Pay the annual ECL by 30 September. This can be done online once the return has been submitted for the year.

If your firm is subject to the Money Laundering Regulations you should consider whether you need to take any action. Please contact us if you want to discuss this further.