The IPA as a supervisory authority

The IPA is a Professional Body Supervisor (PBS), responsible for monitoring its members’ compliance with the Money Laundering Regulations. This is a relatively new role for the IPA, but we regard it as key. In the IPA’s risk-based approach to regulation and AML supervision, we are keen to highlight – to our members, other PBSs and the wider public – that AML supervision is of equal importance to our ‘traditional’ regulation of insolvency practice.

Regulation 49(1)(d) of the Money Laundering Regulations 2017 requires the IPA as a PBS to make arrangements to ensure that contravention of a relevant requirement by a member of their supervised population renders that member liable to effective, proportionate and dissuasive disciplinary measures under the professional body’s rules. In order to achieve this, the IPA’s Committees (meaning the Regulation & Conduct Committee, the Disciplinary Tribunal or the Appeal Tribunal) will consider the following guidance: Money Laundering Regulations Disciplinary Penalties.

The IPA is an active member of external committees and working groups that seek to improve the consistency and effectiveness of AML supervision. This includes the AML Supervisors’ Forum (AMLSF) and the Accountancy AML Supervisors’ Group (AASG), both of which are made up of professional bodies working in collaboration to maintain consistent standards and best practice. As a member of the AASG, the IPA works closely with members of the Consultative Committee of Accountancy Bodies (CCAB), which includes the other Recognised Professional Bodies (RPBs). The CCAB’s aim is to provide a forum whereby its member bodies can meet and act collectively on behalf of the accountancy profession in the UK to promote the public interest.

AML oversight of the IPA

The Office for Professional Body Anti-Money Laundering Supervision (OPBAS) was established in January 2018 to strengthen the UK’s AML supervisory regime and to seek to ensure the professional body AML supervisors provide consistently high standards of AML supervision. OPBAS is hosted by the Financial Conduct Authority, in accordance with the Oversight of Professional Body Anti-Money Laundering and Counter Terrorist Financing Supervision Regulations 2017.

OPBAS helps to facilitate collaboration and information sharing between the PBSs, statutory supervisors and law enforcement agencies, although its formal powers under the Regulations extend only to the PBSs and connected persons within them. It is an oversight body, and does not directly supervise any Insolvency Practitioners, accountants or lawyers. OPBAS’s report on progress and themes from its 2022/23 supervisory assessments of the AML Supervisory Authorities can be found here.

The IPA’s Anti-Money Laundering strategy

The IPA has developed a robust set of AML policies and procedures to ensure it meets its obligations under the Money Laundering Regulations and the OPBAS Sourcebook. These are explained within the IPA’s AML Strategy document, which is available here.

Central to that strategy is the IPA’s AML Committee, which helps to ensure that AML policies and procedures are robust, and that supervisory decisions are taken with the appropriate degree of independence. Its responsibilities include:

ensuring that the IPA meets the ongoing requirements of OPBAS while allowing it to fulfil its role as a regulator of Insolvency Practitioners,
reviewing the IPA’s AML policies and procedures and making recommendations as appropriate,
reviewing the planning and provision of AML resources made available to IPA Members,
reviewing supervisory data and information, and assessing progress against key performance indicators, and
providing effective and constructive challenge to the IPA in respect of the effective AML supervision of its members.

Public report on AML supervision

Under regulation 46A of the Money Laundering Regulations, the IPA is required to publish an annual report containing information about:

measures it has taken to encourage IPA members to report to it actual or potential breaches of the Money Laundering Regulations, and the number of such reports received, and
measures taken to monitor and enforce Insolvency Practitioners’ compliance with their obligations under the Money Laundering Regulations, Part 3 of the Terrorism Act 2000 and Part 7 of the Proceeds of Crime Act 2002.

The IPA’s public report on AML supervision in respect of the year to 5 April 2024 is available here.

The Fifth Money Laundering Directive

The Fourth Money Laundering Directive (4MLD) was published in the EU Official Journal on 5 June 2015, and it gave effect to the updated Financial Action Task Force (FATF) standards after they were significantly updated in 2012. 4MLD was predominantly transposed into UK law through the Money Laundering, Terrorist Financing and Transfer of Funds (Information on the Payer) Regulations 2017 (the ‘Money Laundering Regulations’) and the Proceeds of Crime Act 2002 (POCA).

Following the European Commission’s release, in February 2016, of an Action Plan for strengthening the fight against terrorist financing, EU Member States agreed to revisit some areas of 4MLD to further strengthen transparency and counter-terrorist provisions. This resulted in the publication of the Directive (EU) 2018/843 (the 5th Money Laundering Directive or ‘5MLD’) on 19 June 2018, which entered into force on 10 July 2018.

In March 2018, the UK government and the European Commission agreed the terms of an implementation period, effectively requiring the UK to implement 5MLD by January 2020. The UK shares the objectives that 5MLD seeks to achieve on the prevention of the use of the financial system for the purposes of money laundering or terrorist financing. 5MLD was, in fact, enacted in the UK on 10 January 2020 by way of the Money Laundering and Terrorist Financing (Amendment) Regulations 2019.

5MLD is available here, and the Amendment Regulations are available here. The IPA has also produced an overview, which is available here.

AML complaints and whistleblowing

The IPA has well-established policies and procedures for receiving, investigating and adjudicating complaints against its members. There is a lot of information – for both informants and members – available here, including the relevant Rules of the IPA.

Insolvency Practitioners have a duty under Statement of Insolvency Practice 1 (SIP 1) to report any Insolvency Practitioner who is not complying, or has not complied with, any relevant laws and regulations to the Complaints Gateway or to their relevant Recognised Professional Body (paragraph 4). Insolvency Practitioners also have a specific duty to report any Insolvency Practitioner who is not complying, or has not complied with or has allegedly breached, the Money Laundering Regulations.

The IPA, as a Professional Body Supervisor (PBS), is required to facilitate whistleblowing by providing a secure communication channel for persons to report actual or potential breaches of the Money Laundering Regulations. members (and others) may contact the IPA, requesting anonymity, with information concerning possible AML noncompliance via amlwhistleblowing@ipa.uk.com.

More information on complaints and whistleblowing, and how information relating to insolvency practice may be treated differently to that in respect of AML noncompliance, is available here. Whistleblowing guidance aimed at Insolvency Practitioners in particular may be found here. The IPA’s Whistleblowing Policy can be accessed here.