How will the Economic Crime Levy impact your business and clients?

The Economic Crime Levy (ECL) requires businesses regulated for anti-money laundering (AML) in the UK to pay a fixed fee based on the size of their revenue.

The government announced the new levy during the 2020 Budget as part of its plan to develop a long-term plan for tackling economic crime. The levy is expected to generate £100 million a year, which will be used to enhance financial security measures. Organisations affected by the new levy must register, submit an annual return and pay a fee each year.

What is the economic crime levy?

The ECL is an annual charge introduced by the UK government to tackle economic crime. It will be collected from businesses supervised under the Money Laundering Regulations whose annual revenues are more than £10.2 million. Under the new levy, businesses and organisations must register, submit an annual return and pay an annual fee.

Who is affected by the levy?

The levy affects businesses and organisations engaged in regulated activities related to money laundering. The sectors expected to be directly affected include:

• Credit institutions
• Financial institutions
• Auditors, insolvency practitioners, external accountants, and tax advisers
• Independent legal professionals
• Trust or company service providers
• Estate agents and letting agents
• High-value dealers, casinos, auction platforms, and art market participants
• Cryptoasset exchange providers and custodian wallet providers

Within these sectors, the ECL will affect businesses based on their revenue:

• Medium-sized businesses with revenue of £10.2 million to £36 million
• Large organisation with revenue of £36 million to £1 billion
• Very large businesses with revenue exceeding £1 billion

In cases with a group structure, ECL will only apply to organisations that are individually above the threshold and subject to anti-money laundering supervision. Each group member must register, submit their annual returns, and pay the levy separately. There is no provision for a group registration facility. Each eligible member must fulfil their respective obligations under the ECL framework.

If you have clients within these categories, you must inform them about the Economic Crime Levy and its registration requirements.

How is the ECL collected?

The ECL is collected by either the Financial Conduct Authority (FCA), the Gambling Commission (GC), or HM Revenue and Customs (HMRC). HMRC will collect the ECL for businesses solely supervised by HMRC or supervised by one of the 22 professional accountancy or legal bodies. Organisations supervised by the FCA or GC must adhere to their respective ECL processes, even if HMRC supervises them for certain business activities.

How to register for ECL?

All regulated business for anti-money laundering need to register for the service if their annual turnover is more than £10.2 million. Registering for ECL online must be completed by 30 September 2023 using a Government Gateway user ID and password . Businesses must complete the registration themselves. An agent cannot register on their behalf. If they don’t already have a user ID, this can be created during registration. During the registration process, organisations must provide the following details :

•    UK revenue information for the previous financial year
•    Start date of anti-money laundering regulated activities your business started within the previous year
•    The sector your business operates in
•    The duration of your accounting period

They must also provide the contact details of a representative from within the organisation, including their full name, role, email address and telephone number. A business or organisation only needs to register once but will be required to submit an online return and pay the levy each year.

Summing up

Contributing to the Economic Crime Levy ensures AML-regulated organisations comply with regulations and actively contribute to a safer business environment. By strengthening the integrity of financial systems and safeguarding against illicit activities, organisations can play a key role in promoting security and trust within the business landscape.