FOI release

FOI 113 - IP’s and Money Laundering regulations.

Updated 2 February 2022

Our ref: FOI21/22-113

Date: 17 December 2021

Dear

Re: Freedom of Information Act 2000

Thank you for your email of 23 November in which you requested from the Insolvency Service:

• Is it a criminal offence under insolvency law, The Money Laundering Act, The Fraud Act 2006 or the Proceeds of Crime Act for an insolvency practitioner to fail to undertake their reporting obligations to report money laundering and / or fraud when cognisant that it has taken place?

• Unfortunately I believe that “Failure to report” is an all too frequent occurrence.

• Irrespective of whether “Failure to report” fraud or money laundering is a criminal offence, please provide references to particular sections of the acts of law mentioned that would be known to have been breached in a “Failure to report” situation.

• Also, if you are aware of any comprehensive Government or external public information guides to insolvency practitioner obligations in a liquidation and / administration situation, then the relevant links would be most appreciated. With many companies going into administration following the pandemic, it would be most helpful to the public to have a single point of reference with no need to have to read the legislation in the acts of law themselves.

Your request has been dealt with under the Freedom of Information Act 2000 (FOIA).

I can confirm the agency holds the information that you have requested and I have provided answers to your questions below:

The legislation and regulation of anti-money laundering falls primarily outside of the Insolvency Act and within the Proceeds of Crime Act, anti-terrorism regulation and specific money laundering regulations (such as The Money Laundering and Terrorist Financing (Amendment) Regulations 2019 (MLR 2019) which amended the Money Laundering, Terrorist Financing and Transfer of Funds (Information on the Payer) Regulations 2017 (MLR2017). As detailed at section 3 of the MLR 2017, and not subject to amendments by way of the MLR2019, Insolvency Practitioners are subject to the various regulations contained within the relevant legislation including having a duty to report concerns regarding money laundering and being subject to potential repercussions if they fail to report such concerns.

In January 2018 the Government established the Office for Professional Body Anti-Money Laundering Supervision (OPBAS), based within the Financial Conduct Authority, to strengthen the UK's anti-money laundering supervisory regime- [Office for Professional Body Anti-Money Laundering Supervision (OPBAS)

FCA](https://www.fca.org.uk/opbas).

As per the same link, the OPBAS supervises 25 professional body AML supervisors within the legal and accountancy sectors. Four of the 25 listed professional body supervisors (these being the Institute of Chartered Accountants in England and Wales (ICAEW), the Institute of Chartered Accountants of Scotland (ICAS), Chartered Accountants Ireland (CAI) and the Insolvency Practitioners Association (IPA) respectively) are also the four Regulated Professional Bodies (RPBs) who license and regulate Insolvency Practitioners within the United Kingdom (UK).

Each RPB provides guidance to its member Insolvency Practitioners regarding money laundering. This guidance can be found here:

ICAEW- [Defence Against Money Laundering

ICAEW](https://www.icaew.com/technical/legal-and-regulatory/anti-money-laundering/uk-law-and-guidance/defence-against-money-laundering)

IPA- [Anti-Money Laundering Hub

Insolvency Practitioners Association (insolvency-practitioners.org.uk)](https://insolvency-practitioners.org.uk/regulation-and-guidance/anti-money-laundering-hub/)

ICAS- [Anti Money Laundering news

ICAS](https://www.icas.com/professional-resources/anti-money-laundering-resources/amlnews)

CAI- Anti-Money laundering - ..rteredaccountants.ie (charteredaccountants.ie)

The CCAB has also made some specific guidance for Insolvency Practitioners regarding anti-money laundering which can be found here: Anti-Money Laundering and Counter-Terrorist Financing Guidance for the Accountancy Sector 2020 - CCAB

The Insolvency Service published Dear IP publications provides guidance to the Insolvency Practitioners of the UK. You will be able to search for references to, and guidance to Insolvency Practitioners regarding, money laundering at the following links:

• Pre-2020 Dear IP (via a ctrl f word search for “money laundering”)- Dear IP (bis.gov.uk)

• 2020 onwards Dear IP (via the self-contained word search facility)- Dear Insolvency Practitioner - Guidance - GOV.UK (www.gov.uk)

R3, the trade association for IPs, has also issued guidance regarding money laundering- [R3

Technical Library

England & Wales

Guidance

AML](https://www.r3.org.uk/technical-library/england-wales/technical-guidance/aml/)

Insolvency Service practitioners are also required to act in accordance with the Statements of Insolvency Practice (SIPs) which set principles and key compliance standards by which Insolvency Practitioners are required to comply [Statements of Insolvency Practice (SIPs)

England and Wales

ICAEW](https://www.icaew.com/regulation/insolvency/sips-regulations-and-guidance/statements-of-insolvency-practice/statements-of-insolvency-practice-sips-england). The SIPs, which work in parallel to the prevailing statutory framework, are produced by the Joint Insolvency Committee [Joint Insolvency Committee

ICAEW](https://www.icaew.com/regulation/insolvency/sips-regulations-and-guidance/joint-insolvency-committee).

SIP 2, directly concerns the investigations conducted by Insolvency Practitioners Microsoft Word - SIP 2 - England and Wales 060416.docx (icaew.com). The SIP requires that Insolvency Practitioners, as office holders, “should report possible offences disclosed during the course of their investigations to the relevant authorities.”

The data published on which sectors submitted AML reports is not held or published by the Insolvency Service. HM Treasury published it's “Anti-money laundering and counter-terrorist financing- Supervision Report 2019-20” in November 2021: HMT_Supervision_Report_19-20.pdf (publishing.service.gov.uk). This report details within it the supervisory activity with various sectors including that in which the four RPB's, who license and regulate the Insolvency Practitioners, operate (see Table 3D).

The primary regulations under which UK Insolvency Practitioners operate are The Insolvency Practitioners Regulations 2005 (IP Regs 05) The Insolvency Practitioners Regulations 2005 (legislation.gov.uk) and The Insolvency Practitioners Regulations (Northern Ireland) 2006 The Insolvency Practitioners Regulations (Northern Ireland) 2006 (legislation.gov.uk).

Insolvency Practitioners are also required to act in accordance with both the aforementioned SIPs ([Statements of Insolvency Practice (SIPs)

England and Wales

ICAEW](https://www.icaew.com/regulation/insolvency/sips-regulations-and-guidance/statements-of-insolvency-practice/statements-of-insolvency-practice-sips-england)) and Dear IP publications Dear Insolvency Practitioner - Guidance - GOV.UK (www.gov.uk) and with the Insolvency Service published Code of Ethics for Insolvency Practitioners Insolvency practitioner code of ethics - GOV.UK (www.gov.uk).

Further guidance regarding Insolvency Practitioners, and their roles within formal insolvencies, can be found within the R3 technical library: [R3

Technical Library](https://www.r3.org.uk/technical-library/)

If you are not satisfied with the response we have provided you and would like us to reconsider our decision by way of an internal review (IR), please contact our Information Rights Team at [email protected] or by post at:

Information Rights Team
The Insolvency Service
3rd Floor
Cannon House
18 Priory Queensway
Birmingham
B4 6FD
United Kingdom

You also have the right to contact the Information Commissioners Office (ICO) if you wish for them to investigate any complaint you may have regarding our handling of your request. However, please note that the ICO is likely to expect an IR to have been completed in the first instance.

Kind regards

Information Rights Team

The Insolvency Service

The Department for Business, Energy and Industrial Strategy, Official receivers and the Adjudicator are Data Controllers in respect of personal data processed by the Insolvency Service. For the details about how personal data is processed by the agency, please see the full Insolvency Service Personal Information Charter here: https://www.gov.uk/government/organisations/insolvency-service/about/personal-information-charter