Regulation 18/18A – Firm-Wide Risk Assessment Dip Sample reviews

IPA Insolvency Practitioner newsletter AML Digest, May 2024

As previously advised in the February IPA newsletter, the IPA carries out a random dip sample of approx. 10% of our supervised firms’ Regulation 18/18A firm wide risk assessments.

There have been fewer findings than previous years, which indicates that the standard and content of risk assessments is improving and is capturing and outlining the risks to firms from the work carried out from money laundering.

Please ensure that your risk assessment looks at the risks specific to your firm and considers the high-risk indicators as outlined by the IPA (see article above).

The one area that all bar one of the risk assessments reviewed did not deal with is Proliferation Financing (‘PF’) under Reg 18A. An article on PF was included in the third AML newsletter published in September 2023

The IPA has advised previously that firm risk assessments must consider the risks from PF to the work undertaken by an IP’s firm.

The assessment of risk to insolvency from PF is low. However, the considerations of PF follow the same principles as the requirements to consider the risks of money laundering as set out in Reg 18.

Your due diligence of a potential appointment should be picking up possible areas of concern and noting these potential risk areas will highlight to your staff that where such a business is seeking an appointment that flagging up PF concerns will be required.

You must ensure that PF consideration is included in your Reg 18 – or where appropriate – that you have a separate Reg 18A risk assessment. Failure to do so is a breach of Reg 18A.