Navigating Risk: How the UK’s Insolvency Profession is supervised for Money Laundering

When an insolvency practitioner (IP) is called in to take over a failing business, the work often begins long before the public hears anything about the company’s collapse. Behind the scenes, the practitioner steps into a world where money may be missing, records may be incomplete, and ownership structures can be complex or deliberately obscure. It is therefore no surprise that insolvency practitioners sit at the frontline of the UK’s defences against money laundering.

But who ensures that these practitioners themselves follow the rules? And how does AML supervision actually work in a profession that is both highly specialised and spread across many different firm types?

This is the story of how the UK supervises AML compliance in the insolvency profession, and how that story is about to change.

A profession licensed by a few, supervised by many

Insolvency practitioners must be licensed by what the Insolvency Act calls Recognised Professional Bodies (RPBs). Four bodies license almost the entire profession:

• ICAEW

• IPA (Insolvency Practitioners Association)

• ICAS

• Chartered Accountants Ireland (CAI)

Together, they license around 1,500 IPs, with ICAEW and IPA holding the vast majority. These bodies ensure IPs are technically competent and fit to practise.

But AML supervision is a different matter.

Under the Money Laundering Regulations, the responsibility for monitoring AML compliance falls to the UK’s Professional Body Supervisors (PBSs). While some PBSs are also RPBs, others, such as ACCA or CILEX, do not license IPs at all, yet still supervise firms that may employ them.

This means that an IP can be licensed by one body but supervised for AML by another, depending on the structure and membership of their firm. It is a layered system, and sometimes a confusing one, but it allows supervision to sit with the body best placed to understand a firm’s wider professional activities.

Overseeing all of this is OPBAS, a specialist unit within the Financial Conduct Authority, created to raise standards and bring consistency across the PBS landscape.

Why insolvency work is high-risk

To understand why AML supervision matters, consider the typical insolvency appointment.

An IP might take control of a business where:

• assets have been dissipated quickly before collapse;

• funds have moved offshore or through opaque ownership chains;

• company records are partial, absent, or unreliable;

• directors are uncooperative, or under investigation;

• the business has acted as a conduit for criminal proceeds.

IPs must therefore not only try to rescue businesses or return funds to creditors, they must also identify and report any signs of money laundering. That requires strong due diligence, a well-designed firm-wide risk assessment, proper training, and clear escalation channels for suspicious activity.

The PBSs are responsible for checking that these systems are in place and working.

How PBSs supervise: different routes to the same outcome

Although all PBSs must follow the same regulations, they do not all supervise in the same way. Their styles reflect their membership, sector focus, and regulatory philosophy.

Here is how the monitoring toolkits of key PBSs compare, told through the lens of the practitioner’s journey.

Step 1: Understanding the firm

PBSs first seek to understand the inherent risk of each supervised firm.

• ICAEW uses extensive data gathered through annual AML returns and analytics to segment thousands of firms by risk.

• IPA, with a membership made up largely of insolvency practitioners, applies a specialised, practitioner-focused risk model.

• ACCA, ICAS, and CAI use broader accountancy-based segmentation, highlighting firms with complex structures or higher-risk client groups.

The models differ, but the goal is the same: focus attention where risk is highest.

Step 2: Monitoring compliance

PBSs then deploy a mix of monitoring tools:

• Desk-based reviews allow supervisors to examine risk assessments, procedures, and training data remotely. ICAEW and ACCA rely heavily on this method because of the scale of their supervised populations.

• On-site inspections remain the gold standard for deeper scrutiny. IPA, with its insolvency focus, uses on-site visits more intensively relative to its size, often reviewing real case files and appointment documentation.

• Thematic reviews - used by ICAEW, ICAS and others - take a deep dive into specific risk areas such as sanctions, politically exposed persons (PEPs), or source-of-funds checks.

Each approach reflects the PBS’s philosophy. IPA prioritises practitioner-level scrutiny. ICAEW emphasises data-driven oversight. ACCA and ICAS balance breadth and depth across diverse membership bases.

Step 3: Addressing failures

All PBSs have the power to order remediation, impose fines, or, in serious cases, refer practitioners to disciplinary committees.

• ICAEW and ACCA often use a graduated approach, aiming to uplift standards through education before resorting to sanctions.

• IPA issues proportionately more regulatory penalties per capita, reflecting its closer focus on insolvency-specific compliance.

• ICAS and CAI blend remedial support with enforcement, depending on firm size and risk.

The aim is not punishment for its own sake, but to ensure that weak AML systems do not expose the insolvency profession, or the wider economy, to criminal abuse.

The common thread: CCAB guidance

Despite differences in approach, nearly all PBSs rely on one central piece of guidance: the CCAB Anti-Money Laundering and Counter-Terrorist Financing Guidance for the Accountancy Sector.

This HM Treasury-approved guidance provides the detailed, practical framework that practitioners rely on, including:

• how to carry out due diligence in complex corporate insolvencies;

• how to approach pre-appointment checks;

• how to consider red flags when company records are unreliable;

• when and how to make a suspicious activity report.

Its dedicated insolvency appendix is the glue that helps ensure consistency across the profession. While PBSs monitor compliance, CCAB ensures everyone is working from the same expectations.

Looking ahead: A new era under the Single Professional Services Supervisor (SPSS)

The UK’s supervisory landscape is now set for its most significant transformation in decades. Following extensive consultation, the government has confirmed that it will establish a Single Professional Services Supervisor (SPSS) to oversee all AML obligations across the legal, accountancy, and trust & company service provider sectors. Under the new model, the Financial Conduct Authority (FCA) is expected to assume responsibility for supervising these professions, bringing them together under a single, independent, and well-resourced regulator.

This marks a decisive shift away from the long-standing, fragmented PBS model. Instead of more than 20 professional body supervisors - each with differing levels of capability, risk-focus, and enforcement strength - the SPSS will introduce a unified, consistent, and risk-based supervisory regime. The government’s rationale is clear: tackling economic crime requires not only robust rules, but also regulators with the scale, analytical capability, and independence necessary to enforce them effectively.

For insolvency practitioners and their firms, the implications are far-reaching. Under the SPSS, AML supervision will no longer depend on professional affiliation. Instead, every firm in scope will be monitored under the same standards, with expectations that are likely to rise significantly, particularly around governance, data quality, and demonstrable control effectiveness. The new supervisor is expected to take a far more forensic and intelligence-driven approach, leveraging FCA-style oversight tools such as thematic deep dives, enhanced data reporting, and firmer enforcement frameworks.

OPBAS’s role will likewise change: its oversight function will no longer be needed in its current form once supervision is consolidated. In its place, the SPSS model promises a more streamlined regulatory architecture with clearer accountability and stronger capability.

For the insolvency sector, one that routinely uncovers fraud, asset-dissipation and other forms of economic crime, the creation of the SPSS represents both a challenge and an opportunity. The transition will require some firms to uplift their AML systems, controls, and record-keeping practices. But it will also bring a more consistent supervisory environment aligned with the true risk profile of insolvency work.

Conclusion

The story of AML supervision within the insolvency profession is one of shared responsibility. RPBs ensure competence. PBSs ensure compliance. OPBAS ensures accountability. And CCAB ensures coherence across the entire profession.

But the next chapter will bring change. As government reforms take shape, the insolvency profession is likely to enter a new era of AML supervision, one that is more centralised, more consistent, and more aligned to the high-risk, high-impact nature of insolvency work.

In a sector that routinely uncovers financial wrongdoing, that evolution is not just expected. It is essential.