The Treasury may give a direction under this Schedule if one or more of the following conditions is met in relation to a country.

The power to give a direction is not exercisable in relation to an EEA state.

“Money laundering” means an act which falls within section 340(11) of the Proceeds of Crime Act 2002 (c. 29).

“Nuclear weapon” includes a nuclear explosive device that is not intended for use as a weapon.

“Radiological weapon” means a device designed to cause destruction, damage or injury by means of the radiation produced by the decay of radioactive material.

“Chemical weapon” means a chemical weapon as defined by section 1(1) of the Chemical Weapons Act 1996 (c. 6), other than one whose intended use is only for permitted purposes (as defined by section 1(3) of that Act).

“Biological weapon” means anything within section 1(1)(a) or (b) of the Biological Weapons Act 1974 (c. 6).

In this Schedule “relevant person”, in relation to a direction, means any of the persons to whom the direction is given.

A direction may make different provision in relation to different descriptions of relevant person.

This is subject to the exceptions in paragraph 6.

Credit institution” means a credit institution, as defined in F2Article 4(1)(1) of the capital requirements regulation, when it accepts deposits or other repayable funds from the public or grants credits for its own account (within the meaning of that directive).

The fact that an institution's head office is located in a non-EEA state does not prevent it from being a credit institution or a financial institution for the purposes of this Schedule.

A person who falls within the definition of “credit institution” or “financial institution” solely as a result of engaging in financial activity on an occasional or very limited basis is not regarded for the purposes of this Schedule as operating in the financial sector.

The Treasury may by order amend paragraphs 4 to 7.

Any such order is subject to affirmative resolution procedure.

In this Schedule “designated person”, in relation to a direction, means any of the persons in relation to whom the direction is given.

The kinds of requirement that may be imposed by a direction under this Schedule are specified in—

• paragraph 10 (customer due diligence);

• paragraph 11 (ongoing monitoring);

• paragraph 12 (systematic reporting);

• paragraph 13 (limiting or ceasing business).

Descriptions of transactions or business relationships for the purposes of sub-paragraph (5)(b) may, in particular, include transactions or business relationships of a particular branch (or description of branch) of a relevant person.

The requirements imposed by a direction must be proportionate having regard to the advice mentioned in paragraph 1(2) or, as the case may be, the risk mentioned in paragraph 1(3) or (4) to the national interests of the United Kingdom.

In this paragraph “subsidiary” has the meaning given by section 1159 of the Companies Act 2006 (and “company” has the same meaning as in that section).

A direction may not impose requirements of a kind mentioned in this paragraph on a person who is regarded as operating in the financial sector by virtue only of paragraph 5(2)(g) (certain insurance companies).

A direction may require a relevant person to undertake enhanced ongoing monitoring of any business relationship with a designated person.

A direction may not impose requirements of a kind mentioned in this paragraph on a person who is regarded as operating in the financial sector by virtue only of paragraph 5(2)(g) (certain insurance companies).

A direction may require a relevant person to provide such information and documents as may be specified in the direction relating to transactions and business relationships with designated persons.

The power conferred by this paragraph is not exercisable in relation to information or documents in respect of which a claim to legal professional privilege (in Scotland, to confidentiality of communications) could be maintained in legal proceedings.

The exercise of the power conferred by this paragraph and the provision of information under it is not otherwise subject to any restriction on the disclosure of information, whether imposed by statute or otherwise.

An order's ceasing to have effect in accordance with sub-paragraph (2) does not affect anything done under the order.

An order to which sub-paragraph (2) does not apply is subject to negative resolution procedure.

If apart from this sub-paragraph an order under this paragraph would be treated for the purposes of the standing orders of either House of Parliament as a hybrid instrument, it is to proceed in that House as if it were not such an instrument.

This paragraph applies in relation to a direction given to a particular person.

The Treasury must give notice of the direction to the person.

The direction (if not previously revoked and whether or not varied) ceases to have effect at the end of the period of one year beginning with the day on which the direction is given.

This is without prejudice to the giving of a further direction.

The Treasury may vary or revoke the direction at any time.

Where the direction is varied or ceases to have effect (whether on revocation or otherwise), the Treasury must give notice of that fact to the person.

This paragraph applies to an order containing directions under paragraph 14 (general directions given by order).

The Treasury must take such steps as they consider appropriate to publicise the making of the order.

The order (if not previously revoked and whether or not varied) ceases to have effect at the end of the period of one year beginning with the day on which it was made.

This is without prejudice to the making of a further order.

Where the order is varied or ceases to have effect (whether on revocation or otherwise), the Treasury must take such steps as they consider appropriate to publicise that fact.

The following provisions apply where a direction contains requirements of a kind mentioned in paragraph 13 (limiting or ceasing business).

The Treasury may grant a licence to exempt acts specified in the licence from those requirements.

The Treasury may vary or revoke a licence at any time.

An officer may exercise powers under this paragraph only if the information or documents sought to be obtained as a result are reasonably required in connection with the exercise by the enforcement authority for whom the officer acts of its functions under this Schedule.

In relation to a document in electronic form the power to require production of it includes a power to require the production of a copy of it in legible form or in a form from which it can readily be produced in visible and legible form.

An enforcement officer may take copies of, or make extracts from, any document produced under this paragraph.

The production of a document does not affect any lien which a person has on the document.

An enforcement officer may take copies of, or make extracts from, any document found under sub-paragraph (1).

An officer may exercise powers under this paragraph only if the information or document sought to be obtained as a result is reasonably required in connection with the exercise by the enforcement authority for whom the officer acts of its functions under this Schedule.

In this paragraph “premises” means any premises other than premises used only as a dwelling.

A justice may issue a warrant under this paragraph if satisfied on information on oath given by an enforcement officer that there are reasonable grounds for believing that the first, second or third set of conditions is satisfied.

Where a warrant is issued by a justice under sub-paragraph (1) or (5) on the basis of information on oath given by an officer of the F26FCA , for “an enforcement officer” in sub-paragraph (6) substitute “a constable”.

In the application of this paragraph to Scotland, the references in sub-paragraphs (1), (5) and (7) to information on oath are to be read as references to evidence on oath.

Those powers are not exercisable in relation to information or documents in respect of which a claim to legal professional privilege (in Scotland, to confidentiality of communications) could be maintained in legal proceedings.

The exercise of those powers and the provision of information or production of documents under them is not otherwise subject to any restriction on the disclosure of information, whether imposed by statute or otherwise.

If the information defaulter is a body corporate, a partnership or an unincorporated body of persons that is not a partnership, the order may require any officer of the body corporate, partnership or body, who is (wholly or partly) responsible for the failure to meet such costs of the application as are specified in the order.

Anything done or omitted to be done by, or in relation to, a local enforcement officer in the exercise or purported exercise of a power in this Part of this Schedule is treated for all purposes as if done or omitted to be done by, or in relation to, an officer of the OFT.

Sub-paragraph (2) does not apply for the purposes of criminal proceedings brought against the local enforcement officer, the relevant local weights and measures authority, DETINI or the F28FCA, in respect of anything done or omitted to be done by the officer.

In this paragraph “the relevant local weights and measures authority”, in relation to a local enforcement officer, means the authority of which the officer is an officer.

No such penalty is to be imposed if the authority is satisfied that the person took all reasonable steps and exercised all due diligence to ensure that the requirement would be complied with.

In sub-paragraph (3) “appropriate body” means a body which regulates or is representative of any trade, profession, business or employment carried on by the person.

A person on whom a penalty is imposed under this paragraph is not liable to be proceeded against for an offence under paragraph 30 in respect of the same failure.

An enforcement authority may impose a penalty of such amount as it considers appropriate on a relevant person who has intentionally participated in activities knowing that the object or effect of them was (whether directly or indirectly) to circumvent a requirement imposed by a direction under this Schedule.

In sub-paragraph (1) “appropriate” means effective, proportionate and dissuasive.

A person on whom a penalty is imposed under this paragraph is not liable to be proceeded against for an offence under paragraph 30A in respect of participation in the same activities.

This paragraph applies where HMRC decide to impose a penalty under paragraph 25 F31or 25A on a person.

The person may appeal to the tribunal against the decision in accordance with paragraph 26F.

In this paragraph, and in paragraphs 26A to 26F, “tribunal” means the First-tier Tribunal or, where so provided by or determined under Tribunal Procedure Rules, the Upper Tribunal.

Section 85 of the Value Added Tax Act 1994 (settling appeals by agreement) shall apply to appeals under this paragraph as if the reference to section 83 of that Act included a reference to this paragraph.

HMRC must offer a person (P) a review of a decision that has been notified to P if an appeal lies under paragraph 26 in respect of the decision.

The offer of the review must be made by notice given to P at the same time as the decision is notified to P.

This paragraph does not apply to the notification of the conclusions of a review.

But P may not notify acceptance of the offer if P has already appealed to the tribunal under paragraph 26F.

HMRC shall not review a decision if P has appealed to the tribunal under paragraph 26F in respect of the decision.

If under paragraph 26A, HMRC have offered P a review of a decision, HMRC may within the relevant period notify P that the relevant period is extended.

HMRC shall not review a decision if P has appealed to the tribunal under paragraph 26F in respect of the decision.

This paragraph applies if HMRC are required to undertake a review under paragraph 26B or 26D.

The nature and extent of the review are to be such as appear appropriate to HMRC in the circumstances.

The review must take account of any representations made by P at a stage which gives HMRC a reasonable opportunity to consider them.

Where HMRC are required to undertake a review but do not give notice of the conclusions within the time period specified in sub-paragraph (6), the review is to be treated as having concluded that the decision is upheld.

If sub-paragraph (8) applies, HMRC must notify P of the conclusion which the review is treated as having reached.

But that is subject to sub-paragraphs (3) to (5).

In a case where paragraph 26E(8) applies, an appeal may be made at any time from the end of the period specified in paragraph 26E(6) to the date 30 days after the conclusion date.

An appeal may be made after the end of the period specified in sub-paragraph (1), (3)(b), (4)(b) or (5) if the tribunal gives permission to do so.

In this paragraph “conclusion date” means the date of the document notifying the conclusions of the review.

This paragraph applies if the F36FCA F37... (“the authority”) proposes to impose a penalty under paragraph 25 F38or 25A on a person.

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In this paragraph “the tribunal” means the First-tier Tribunal or, where so provided by or determined under Tribunal Procedure Rules, the Upper Tribunal.

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A penalty imposed under paragraph 25 F48or 25A is payable to the enforcement authority that imposed it.

Any such penalty is a debt due to the authority and is recoverable accordingly.

A person who fails to comply with a requirement imposed by a direction under this Schedule commits an offence, subject to the following provisions.

No offence is committed if the person took all reasonable steps and exercised all due diligence to ensure that the requirement would be complied with.

In sub-paragraph (3) “appropriate body” means a body that regulates or is representative of any trade, profession, business or employment carried on by the alleged offender.

A person who is convicted of an offence under this paragraph is not liable to a penalty under paragraph 25 in respect of the same failure.

A relevant person who intentionally participates in activities knowing that the object or effect of them is (whether directly or indirectly) to circumvent a requirement imposed by a direction under this Schedule commits an offence.

A person who is convicted of an offence under this paragraph is not liable to a penalty under paragraph 25A in respect of participation in the same activities.

An offence under this Schedule may be committed by a United Kingdom person by conduct wholly or partly outside the United Kingdom.

Nothing in this paragraph affects any criminal liability arising otherwise than under this paragraph.

HMRC may conduct a criminal investigation into any offence under this Schedule.

In sub-paragraph (5) “criminal investigation” has the meaning given by section 35(5)(b) of the Commissioners for Revenue and Customs Act 2005 (c. 11).

For the purposes of this paragraph a certificate of the prosecutor (or, in Scotland, the Lord Advocate) as to the date on which such evidence as is referred to above came to their notice is conclusive evidence.

If the affairs of a body corporate are managed by its members, sub-paragraph (1) applies in relation to the acts and defaults of a member in connection with the member's functions of management as if the member were a director of the body.

In this paragraph—

• “officer”—

  1. (a)

     in relation to a body corporate, means a director, manager, secretary, chief executive, member of the committee of management, or a person purporting to act in such a capacity, and

  2. (b)

     in relation to an unincorporated association, means any officer of the association or any member of its governing body, or a person purporting to act in such capacity;

• “partner” includes a person purporting to act as a partner.

Proceedings for an offence under this Schedule alleged to have been committed by a partnership or an unincorporated association must be brought in the name of the partnership or association (and not in that of its members).

Rules of court relating to the service of documents have effect in relation to proceedings for an offence under this Schedule as if the partnership or association were a body corporate.

A fine imposed on the partnership or association on its conviction of such an offence is to be paid out of the funds of the partnership or association.

Sub-paragraph (1) does not apply in relation to a year if no direction under this Schedule is in force at any time in that year.

A supervisory authority must take appropriate measures to monitor persons operating in the financial sector for whom it is the supervisory authority for the purpose of securing compliance by those persons with the requirements of any directions under this Schedule.

Where under sub-paragraph (2) there is more than one supervisory authority for a person, the authorities may agree that one of them will act as the supervisory authority for that person for the purposes of this Schedule.

Where no agreement has been made under sub-paragraph (3), the supervisory authorities for a person must co-operate in the performance of their functions under this paragraph.

The functions of the FSA under this Schedule shall be treated for the purposes of F66Parts 1, 3 and 5 of Schedule 1ZA to the Financial Services and Markets Act 2000 (c. 8) (general provisions relating to the Authority) as if they were functions conferred on the F67FCA under that Act.

Any penalty under paragraph 25 F68or 25A (civil penalties) received by the FSA is to be applied towards expenses incurred by it in connection with its functions under this Schedule or for any incidental purpose.

Where the Treasury are under a duty to give a notice to a person but do not have an address for them, they must make arrangements for the notice to be given to the person at the first available opportunity.

This Schedule binds the Crown, subject as follows.

No contravention by the Crown of a provision of this Schedule makes the Crown criminally liable.

Nothing in this paragraph affects Her Majesty in her private capacity.

This is to be construed as if section 38(3) of the Crown Proceedings Act 1947 (c. 44) (meaning of Her Majesty in her private capacity) were contained in this Schedule.

In this Schedule “United Kingdom person” means a United Kingdom national or a body incorporated or constituted under the law of any part of the United Kingdom.

Her Majesty may by Order in Council extend the definition in sub-paragraph (1) so as to apply to bodies incorporated or constituted under the law of any of the Channel Islands, the Isle of Man or any British overseas territory.

In this Schedule any reference to an amount in one currency includes the equivalent amount in any other currency.

Unless otherwise defined, expressions used in this Schedule and in Directive 2015/849/EU of the European Parliament and of the Council of 20th May 2015 on the prevention of the use of the financial system for the purpose of money laundering or terrorist financing have the same meaning as in that Directive.