Responses to questions from the IPA Learning March AML webinar
IPA Insolvency Practitioner newsletter AML Digest, April 2026
We had a record attendance at our IPA Learning session on 17 March 2026. As a result, we couldn’t deal with every question that was asked on the day, so we promised to get back to you with our responses. These are below.
I was appointed as Liquidator from the OR rota. What are my responsibilities prior to taking the appointment?
This is covered by paragraphs F.3.8 and F.3.9 in the CCAB Guidance Insolvency Appendix F. Where you are appointed without prior involvement with the insolvent individual or entity, you can place some reliance on the order of appointment and initial Court Order to evidence the identity of the insolvent. However, this does not remove the need to consider the identity of any beneficial ownership or to consider if MLTF activity has taken place (the ‘assess’ part of CDD/EDD) as well as continuing to monitor risks during the appointment.
Please expand on what an IP must to do to verify source of funds in MVL.
As we discussed during the webinar, this should be founded on a risk-based approach. Sense-check the information you hold – do the funds held by the company marry with the turnover and receipts/funds introduced via trade into the company bank accounts? Has the sale of any major asset been undertaken and can this be supported with proper valuations, legal advice and can the sale be evidenced? If it was undertaken by the agents or solicitors, is there other evidence that you can rely on? Fundamentally, can you identify the source of the funds that are to be distributed. As an IP you need to be content that the funds you are going to hold and distribute as Liquidator are ‘legitimate’ – so any checks that you can carry out to provide you with comfort that the details you are seeing do seem to match with the trading pattern, business activity and or asset sale would assist.
A few months ago, Turnkey demo’d a product to deal with ID verification using “One ID”. Does the IPA have a view on whether this is compliant and acceptable?
As with any electronic ID verification (IDV) system, this is simply a tool that has been devised to assist you with your identification verification requirements. Any tool that you use – OneID, Creditsafe, Veriphy, SmartSearch etc. – is designed to provide you with information on identification and verification of the individuals/entities. This is just one part of customer due diligence (CDD).
None of the IDV systems assess the risks of transacting with the individual or entity which is the required other strand of CDD/EDD work. That is for you to do, using not just the ID information but also all the other information you have regarding the activity and status of the person or the activity and trading history of the business or company. You must bring your personal expertise to the task of risk assessment once IDV has been conducted. Without that assessment, it does not matter what electronic verification system is used, you will not have completed CDD/EDD checks as per the MLR17.
Company is in Creditor Voluntary Liquidation. Liquidator is pursuing a director loan account (DLA) from the director who is now in an IVA . The Supervisor in the IVA is receiving third party funds. What AML checks should the liquidator undertake prior to/upon receipt of the dividend from the IVA?
As we discussed on the webinar – this is for the Supervisor of the IVA to deal with, not you as Liquidator of the CVL. If you are a Supervisor (or in any capacity as office holder) receiving third party funds, you should check F.3.19 of the CCAB Guidance Insolvency Appendix F: CDD on the payer of other funds. If you do have concerns however, you are entitled to raise a SAR and DAML request via your MLRO.
If a full SmartSearch with watchlist search is undertaken as standard on all CDD, what is needed on top of this if a requirement for EDD is identified?
We agree that with the sophistication and the breadth of checks that can be undertaken now, it is almost EDD on every case.
However, separate checks on social media, Google search, LinkedIn etc. can be made to sense check and ensure that you are content that the information is complete. Also consider third-party validation if appropriate e.g. to confirm that registration is genuine or document is valid.
What due diligence should be taken regarding company customers when realising a debtor balance if the minimum amount is exceeded? It’s hard enough to recover debts let alone verify the customer
CCAB Guidance Insolvency Appendix F has a section on CDD on purchasers of an entity’s assets, paragraphs F.3.15 to F.3.18. Rather than repeat the guidance in detail, a link to the guidance is here.
CCAB guidance is clear that if there are asset realisations/distributions, this is high risk. Therefore 95%+ cases are high risk. Applying different is against guidance?
Insolvency, particularly MVL appointments, is recognised as a high risk sector for ML activity. Assets realisations and distributions are listed as a potential higher risk indicators in Service Risk factors (per Reg 18). CCAB Guidance Insolvency Appendix F.2.4 states ‘…IPs must take steps to identify all areas of relevant risks, the severity of the threat presented by them and respond appropriately to them.’
A high risk indicator is therefore just an indicator of potential higher risk. You are entitled, as we outlined in the webinar, to consider that the circumstances of a case are such that the case is a normal or low risk in insolvency terms (for example there are no significant assets to realise and trading ceased sometime prior to appointment) or to conclude that it is higher risk (for example the company is trading overseas and has exposure to FATF listed countries), but please ensure that you note the reasons for your conclusions as to level of risk and how you will mitigate that, if possible.
Your risk assessment, starting with an initial ethical code considerations, must be kept under review during the life of an appointment to ensure that any risks remain effectively understood, managed and mitigated. However, if you wish to treat every case as high-risk and undertake EDD on all cases, you are entitled to do so.
If a case administrator was to submit a SAR, can you confirm if the IP should be made aware.
Firstly, we wonder why a case administrator is submitting a SAR. If a member of staff has a suspicion of potential MLTF they should be reporting their suspicions to the firm’s MLRO. It is then for the MLRO to consider the detail and decide if a SAR should or should not be submitted to the NCA. This process should be clearly set out in any firm’s SAR policy.
On the specific point raised, this would not be tipping-off under S333B (1) POCA 2002. This states that an employee, officer or partner of an undertaking does not commit an offence under S333A (tipping-off) if the disclosure is to an employee, officer of partner of the same undertaking. However, a small caveat: if a member of staff (including the IP) is one of the subjects of the SAR, then clearly they could not be told as that would be tipping-off.
Are there any updates in relation to the transition to the Financial Conduct Authority being responsible for AML supervision for insolvency practitioners, or timescales?
The short answer is ‘no’. The IPA has seen the plan from the FCA for their 2026 transition work and it is based on information and detail gathering to provide the FCA with better context and understanding of how supervision is undertaken across sectors, and what specific training and guidance will be needed. No detail on legislative changes or proposed timescales for a phased transition to the FCA has been provided, nor indicative timescales given.
We do a SAR for e.g. BBL misuse, but it is found too late for DAML after we’ve already received payment from the company and established a business relationship months ago?
We have assumed that your question relates to director or company funds for the Statement of Affairs and calling of the decision procedure to place the company into CVL, and then your SIP 2 investigations indicated that there was BBL misuse and was thus reported.
Assuming the company has traded since BBLs concluded in 2021, you would be entitled to assume that the funds used to pay the pre-appointment costs were from trading or director funds, not BBL misuse. A SAR may be required in relation to the BBL application and/or use of funds, or if you retrospectively established that the funds you accepted were tainted. A DAML can only be submitted if you have a concern that a future and specified transaction relates to tainted funds.
If there is an overdrawn DLA that the director is unable to repay, should a SAR always be submitted for tax evasion and if not, when should you?
As advised during the webinar there is no list or confirmation that the IPA (or any regulator) can provide that categorically states ‘this is when a SAR is required and anything not in the list is when a SAR is not needed’. It depends on whether you have a suspicion of MLTF that has taken place or some sort of criminal or fraudulent activity is suspected.
If you consider that the DLA issue does create a suspicion for a SAR then report this to your MLRO. You cannot be criticised for doing so. Also ensure that you report your suspicion to the Insolvency Service for CDDA purposes and you may also need to report to HMRC and Report Fraud, and if you consider this to be a criminal matter, to the police. A SAR does not prevent you reporting to other agencies, in the same way reporting to other agencies does not equate to having completed a SAR.