David Holland, Chief Inspector and IPA Money Laundering Reporting Officer

Being able to demonstrate a knowledge of current Anti-Money Laundering and Counter-Terrorism Financing (AML/CTF) risks remains a core part of compliance for Insolvency Practitioners. It is imperative to ensure that you have a robust Regulation 18 firm risk assessment and the risks of proliferation financing, as per Regulation 18A, should also be evidenced as considered either in the same document or separately. The firm’s risk assessment is a key document that helps shape the AML policies and procedures. AML policies and procedures should provide clear guidance to your teams on dealing with AML matters, and they are a key part of demonstrating a firm’s governance, risk and compliance with the regulations.

The IPA is continuing to focus for 2023/24 on SIP 2 investigations and in particular how investigations into Covid loans, furlough and bounce back loans are dealt with. A specific focus will be on low asset CVL cases, where there are minimal creditors but usually a significant bounce back loan – to understand the work undertaken to properly investigate matters.

Such investigations link to AML work and the need to ensure that IPs are properly reporting suspicions of fraudulent obtained and used bounce back loans and other Covid support funds to the NCA by the means of Suspicious Activity Reports (SARs) – as well as reporting under S218 (4) to HMRC and other bodies as may be required.

Recent full inspections, AML visits and AML reviews are indicating firms where SARs are not being made as soon as a suspicion is formed on possible Covid loan misuse. IPs must ensure that where suspicions are held that reports are made to the NCA immediately.

At our recent Manchester Roadshow, a representative of the North West Regional Organised Crime Unit made it clear that regional forces are targeting ‘enablers’ who have not made SAR reports where it is clear that there should have been suspicions of misuse of such government support measures and reports made to the relevant authorities. Please ensure that you are not subject to an investigation for failing to report and ensure that SARs policies are reviewed and updated (where necessary) and that your teams are aware of the need to report suspicions to the firm’s Money Laundering Reporting Officer (MLRO). On 2 June 2021, the Crown Prosecution Service (CPS) published updated guidance on prosecuting standalone ‘failure to disclose’ cases under section 330 of the Proceeds of Crime Act 2002 (POCA).

Sanctions also remain a key area for IPs to be aware of and an article on changes to the UK sanctions is included with some guidance for members on how to deal with these matters. Again, if there is any concern about dealing with a sanctioned entity, contact OFSI to discuss if a licence is needed and do not pay, issue, sell or deal with a sanctioned entity without the proper OFSI licence in place.

Finally, our dedicated AML event in Birmingham this month is fast approaching. Details on the event have been circulated and are also included within this digest. We have already had a lot of interest in the event, the first ever that is dedicated to AML and fraud matters, and tailored for insolvency professionals.