IPA Insolvency Practitioner newsletter, March 2022
- Paul Smith, CEO
- Kevin Hellard, President
- Insolvency Service Future of Insolvency Regulation Consultation: IPA Response
- IPA Volume Provider Regulation Scheme 2021 Benchmark Report
- Anti-Money Laundering: Suspicious Activity Reports update
- A call for successor IPs
- Upcoming events: Annual Conference selling fast; plus, get the competing requirements of insolvency and employment law right!
- Exclusive discounts on training from the IPA and our partners
- IPA Board Elections
- Case law update
As we have previously notified members, insolvency and related services in the UK are exposed to risk from potential activity arising from the Russian sanctions. It is therefore essential that members fully understand the assets under the ownership and control of their clients and how this is likely to impact on any insolvency appointments.
To highlight points we have previously raised, it is an important part of your Customer Due Diligence (CDD) to check for updated sanctions, as well as checking the Office of Financial Sanctions Implementations (OFSI) list of financial sanctions asset freeze targets. Access financial sanctions guidance here. Those of you using electronic verification service should make sure the service is updated and regularly reviewed. Whilst the profession should be mindful of the risks posed by new appointments, existing cases may also pose a threat to sanction breaches. In addition, payments to charge-holders and dividend payments to creditors and shareholders should be reviewed carefully and further advice sought as necessary.
If you know or suspect that a breach of financial sanctions has taken place, you are legally required to report this to OFSI (in addition, it is likely that SAR and DAML request will need to be submitted). This includes situations where a person you are dealing with, whether directly or indirectly, is a designated person, if you hold any frozen assets, or if knowledge or suspicion of these arises while conducting your business.
You should consider any increased risks associated with transactions with Russia at this time. Access guidance on the sanctions here. You can find out more information about customer due diligence and risk assessments on a useful HMRC page here, and all of the IPA’s Anti-Money Laundering (AML) guidance and help can be found here.
The CCAB has also issued some particularly useful guidance in response to the crisis in Ukraine.
The ECA received royal assent on 15 March 2022 and is designed to make it easier and quicker to identify and trace illicit wealth and then impose sanctions. The ECA introduces new provisions relating to:
- Unexplained Wealth Orders; and
- Registration of Overseas Entities.
IPs and their firms need to keep track of this fast moving area of changing legislation which increases the speed with which individuals can be sanctioned. This is demonstrated by the sharp rise in sanctioned individuals since the legislation was introduced. IPs need to introduce review procedures and evidence regular checks of the sanctions list on a routine basis over the following weeks and months.
Suspicious Activity Reports
An important update has been issued by the National Crime Agency (NCA) in respect of lodging Suspicious Activity Reports (SARs), providing a code for SAR submissions where the money laundering activity is linked to entities sanctions by the UK, US, EU and others as a result of the Russian invasion of Ukraine. Access the update here.
Insolvency Service update
The Insolvency Service has released a special edition of its Dear IP newsletter. It contains key updates and guidance relating to Russian sanctions and what IPs need to consider in order to ensure that requirements are not breached in their work. Access the issue here.