Experts from ICAEW’s anti-money laundering (AML) and insolvency teams recently led a roundtable discussion at a conference organised by the School of Law of the University of Leeds. The conference, Behind Closed Books: Money Laundering in UK Insolvency Proceedings, was part of a wider project to explore money laundering risks in the sector and the ‘lived realities’ of practitioners working within it.
The UK government’s latest National Risk Assessment for Money Laundering and Terrorist Financing, released on the day of the conference, identifies accounting services as being at high risk of money laundering, and references insolvency specifically. Since 2024, there has also been an AML Intelligence Cell within the Insolvency Service.
So far, however, despite this recognition of the inherent risk, there’s been little research into how money laundering manifests itself in insolvency. “When we started to look for information, we found there was a massive gap, from both a practical and academic point of view,” says Dr Oriana Casasola, co-investigator on the project and Lecturer in Commercial, Corporate and Banking Law at the School of Law of the University of Leeds. “And we were quite surprised by this because of the importance of the topic.”
As regulated entities under the UK’s AML regime, Insolvency Practitioners (IPs) have a critical role in identifying suspicious activities and helping to combat money laundering and other economic crimes. “But the existing UK AML regime in insolvency lacks the direct input of those at the forefront of the sector,” explains Dr Ilaria Zavoli, project lead and Lecturer in Law at the School of Law of the University of Leeds. “And practice-based insights are essential for effective regulatory implementation.”
“Our idea for the project was to start a discussion and try to identify some of the key issues and needs,” she says. “These will then inform the priority areas we need to consider in AML regulation and help to tailor the regime to the specific needs of the insolvency sector.”
Building relationships
The current project – funded by an Economic and Social Research Council (ESRC) Impact Acceleration Account grant until the end of 2025 – is a starting point for wider research and collaboration. “As well as identifying money laundering risks and challenges,” says Ilaria, “we’re looking at building relationships across AML agencies, supervisory and professional bodies, and individual IPs involved in implementing AML regulations.”
As part of this, the conference brought together leading academic and non-academic experts from the UK and abroad, including speakers from the Insolvency Service, the IPA and ICAEW. “There’s clearly great interest in this area,” says Ilaria. “Online and in person, we had more than 100 participants throughout the day.”
As well as traditional paper presentations from academics, there was a keynote speech by Neil Freebury, Head of Intelligence at the Insolvency Service, and two roundtable discussions, the second of which was led by Victoria Alexandrou, Insolvency Manager at ICAEW, and Sandy Price, ICAEW’s AML Manager.
Based on the themes of outreach, reputation and public trust, ICAEW’s session focused on its work as an AML supervisor and particularly its monitoring of IPs. “We talked about our dual-faceted role,” says Sandy. “On the one hand, we monitor our firms, including IPs, to make sure they're compliant with the regulations but, in our role as an improvement regulator, we also provide them with support and guidance.”
The session went on to highlight how ICAEW interacts with the public and the firms it supervises, as well as its involvement in various information-sharing bodies, including the Public Private Threat Groups. Turning to insolvency specifically, Victoria presented the latest insolvency monitoring results. “In our role as an improvement regulator, we're always looking to strengthen trust in the work that our 752 IPs are doing,” says Victoria, “and to ensure the public interest is protected.”
“In 2024, we carried out 153 monitoring visits and, as part of those visits, we consider the AML risks and red flags on the cases we’re reviewing,” she explains. “In recent years, one of the biggest AML issues we've found on our monitoring visits has been the failure of IPs to submit suspicious activity reports (SARs) when identifying fraud in relation to COVID relief schemes and, even five years on, that's something we are still raising.” To further assist IPs, ICAEW will be contacting the insolvency compliance partner at any firm that states on its annual return that it hasn’t submitted any SARs during the period.
“We regularly discuss emerging risks with our anti-money laundering team, so we can keep our IPs up to date,” Victoria adds. “And this conference proved very useful in understanding some of those, especially around members’ voluntary liquidations.”
Victoria also outlined the work ICAEW does in supporting IPs with guidance and other resources, including webinars, checklists, helpsheets, newsletters and articles. “Our six webinars last year were attended by more than 2,000 people,” she says. “And we've also just started our new Insolvencybites series which are short videos aimed specifically at IPs and those involved in business restructuring. AML topics covered so far include professional enabling and SARs.”
Red flags
“One of the benefits of us attending this conference was to learn more about how money laundering manifests itself in the insolvency profession,” says Sandy. “As the UK’s largest insolvency regulator, understanding the context of how IPs experience money laundering in practice is crucial to our oversight.”
Some of the themes that came out of the conference in terms of red flags to look for in insolvency proceedings included: complex corporate structures, intercompany loans, sale of assets at below value, deliberate undervaluing of assets, offshore financial structures, and inflation of liabilities.
“When one of the presenters was asked about the one thing IPs could do that would make the biggest difference, they replied ‘effective customer due diligence (CDD)’,” says Sandy. “And CDD links to all those themes: understanding complex structures, identifying the ultimate beneficial owners, asking where the assets are and whether the liabilities are valid, and checking where money is coming from and going out to.”
Next steps
The next step for the University of Leeds researchers is to produce a report setting out the insights from the conference. “There will be three different documents,” explains Ilaria. “A longer policy paper of 10 to 15 pages and two short policy notes.”
The policy paper will be distributed to ICAEW and other supervisory and professional bodies, as well as to OPBAS (the Office for Professional Body Anti-Money Laundering Supervision) and the Insolvency Service. One of the policy notes will go to IPs and the other to MPs, each with appropriate calls for action. There will also be a professional infographic video capturing the policy paper’s findings, which will be aimed at a broader audience.
“Our final action for this project will be setting up an international network of experts dedicated to fostering collaborative governance approaches to AML in insolvency,” adds Ilaria. The hope is that this will serve as a catalyst for innovation and cooperation in combating money laundering globally.
“The existing project is also part of a bigger idea, which we are developing with non-academic partners, including ICAEW,” explains Ilaria. The aim is to get additional ESRC funding for another three years, and the other partners involved are the IPA, the Institute of Chartered Accountants of Scotland (ICAS), the Insolvency Service’s AML intelligence cell, OPBAS, and R3, the trade association for UK insolvency and restructuring professionals.
If the bid for funding is successful, planned activities and outputs include knowledge exchange meetings, journal articles, policy briefs, an edited collection, and another conference and video. “There will also be empirical research in the form of a nationwide survey distributed to IPs, as well as semi-structured interviews and focus groups,” explains Ilaria. “We will then analyse practitioners’ contributions to provide an evidence base of what's happening on the ground.”
Lived realities
“Hearing from insolvency practitioners is foundational to our project,” says Oriana. “We want to learn about the lived realities of those who have to do the AML checks and meet regulatory requirements, so that we know where the challenges and difficulties lie.”
“There is growing interest in getting the views of IPs on board, and a collective understanding that the lived realities of IPs is what matters to improve legislation and the wider AML regime for insolvency,” she adds. “So, we want their voices to be represented fully in the discussion.”
“It's not just about the letter of the regulations and specific obligations,” stresses Oriana, “but also about how we interpret this in practice, and how we become innovative and creative in our approach to AML regulation and supervision in the sector.”
“At ICAEW, we’re looking forward to further collaboration on these projects with the other partners,” says Victoria. “Working with our firms and IPs, other regulators, and government and private sector bodies is key to effective supervision and a robust regulatory framework that continues to protect the public interest.”