The UK Financial Intelligence Unit has introduced a new SAR glossary code for money laundering through markets (MLTM).MLTM is money laundering taking place within capital markets in which shares, derivatives, bonds and other instruments are bought and sold. An explanatory note re the new code is available here The revised SAR Glossary Codes and Reporting Routes document which is now on the National Crime Agency website at: https://www.nationalcrimeagency.gov.uk/who-we-are/publications/517-glossary-codes-and-reporting-routes-may-2021/file  The purpose of this booklet is to provide guidance on the use of Suspicious Activity Report (SAR) glossary codes and reporting routes.

IAASA has recently advised that the Institute of Chartered Accountants in England and Wales (ICAEW) will cease to be a Recognised Accountancy Body (RAB) under Irish company law from 21 July 2021 and will thereafter have no authority to qualify or approve statutory auditors or statutory audit firms in Ireland. Unsurprisingly, the Institute has had a number of enquiries regarding ongoing eligibility for audit registration in Ireland from Institute firms who include ICAEW members amongst the firm’s responsible individuals (RIs) or amongst the qualified majority of owners and management board members of the audit firm.   The Institute has taken legal advice on the issues involved and has identified a solution which will cause minimal disruption to these Institute firms as a result of ICAEW’s cessation as a RAB. Eligibility for statutory auditor (responsible individual/RI) status in Ireland is dependent on being a member of a RAB as well as holding the appropriate qualification.  An ICAEW member who is a RI at an Institute firm should become a member of another RAB before 21 July 2021.  The Institute (a RAB) has in place a reciprocal membership agreement with ICAEW under which a member of ICAEW can easily become a member of the Institute so long as membership of ICAEW is also retained.     Similarly, ICAEW members who are currently counted in the qualified majority of owners and management board members at Institute approved audit firms will need to become members of another RAB by 21 July 2021 to ensure that the firm’s ongoing eligibility for Irish audit registration is unaffected. The Institute will continue to recognise the audit qualification awarded by ICAEW before 21 July 2021 as an appropriate qualification for audit approval purposes.  ICAEW members who wish to apply for reciprocal membership of the Institute can do so by contacting the Membership Department at registry@charteredaccountants.ie. In the coming weeks, the Institute’s Professional Standards Department will write to the audit compliance principals at Institute firms approved for audit in Ireland in relation to the matters outlined above.  Queries on these matters can be addressed to professionalstandards@charteredaccountants.ie.

Guidance on the Requirements for independent scrutiny of the disposal of assets in administration, including pre-pack sales The Administration (Restrictions on Disposal etc. to Connected Persons) Regulations 2021 come into force on 30 April 2021. The Insolvency Service has published Guidance to assist in the application of these Regulations.

Following a Joint Insolvency Committee (JIC) consultation, changes were made to Statement of Insolvency Practice (SIP) 9 with effect from 1 April 2021. The introduction of the revised SIP 9 has resulted in the Recognised Professional Bodies (RPBs) being asked a number of questions surrounding its practical operation.  Click on the link provided for a list of the FAQs.

A new IVA protocol 2021 has just been published by the Insolvency Service. A Dear IP, with further information, will be issued shortly for practitioners. The IVA protocol is a voluntary agreement, which provides an agreed standard framework for dealing with straightforward consumer IVAs and applies to both IVA providers and creditors.

Changes to SIP 16 and SIP 13 – Effective Date 30 April 2021 The Administration (Restrictions on Disposal etc. to Connected Persons) Regulations 2021 (the Regulations) come into effect on 30 April 2021. The Regulations impose additional obligations on connected person purchasers in administrations. Equivalent legislation is not yet in force in Northern Ireland. SIP Changes These legislative changes mean that it has been necessary to make changes to Statement of Insolvency Practice 16 (pre packaged sales in administrations) and Statement of Insolvency Practice 13 (disposal of assets to connected parties in an insolvency process) to align the content of the SIPs with the law. No changes have been made to the SIPs other than those required by the change in the law. The revised SIPs are SIP 16 - pre packaged sales in administrations (England and Wales) SIP 16 - pre packaged sales in administrations (Scotland) SIP 13 - disposal of assets to connected parties in an insolvency process (England and Wales) SIP 13 - disposal of assets to connected parties in an insolvency process (Scotland) The Joint Insolvency Committee has amended SIP 16 to remove references to the Pre Pack Pool and to replace these with reference to the statutory obligation placed on a connected person purchaser to obtain the opinion of an evaluator. The Regulations apply to transactions that take place within 8 weeks of the appointment of an administrator. This extends the scope of the Regulations beyond pre pack administrations to all administrations within that time frame. That means equivalent changes had to be made to SIP 13 as it applies to any connected party transaction in an insolvency process. Effective Date The new SIPs will be effective from 30 April 2021. IPs should take care to familiarise themselves with the Regulations and the new SIPs prior to that date. No changes in Northern Ireland at this time Northern Ireland has yet to enact equivalent legislation, though it is expected to adopt similar requirements by 29 June 2021. Until that time, the changes to SIP 16 and SIP 13 will only apply in England and Wales and Scotland. Statement of Insolvency Practice 4 - disqualification of directors When new legislative provisions for the reporting obligations of insolvency office holders on the conduct of those who formerly controlled a company came into effect from 6 April 2016 it was intended that Statement of Insolvency Practice 4 (SIP 4) - disqualification of directors would be withdrawn. However, there were still some ongoing cases where an office holder was able to submit a paper conduct return rather than use the online reporting tool. The Insolvency Service has informed the Joint Insolvency Committee that all such cases should now be complete. SIP 4 will therefore be withdrawn effective 30 April 2021

Professional Standards Department has just published Issue 28 of the Regulatory Bulletin. Click on the link provided to access this publication.

Regulatory Fee invoices for 2021 are available online at the Myaccount portal of the website. If you are having any problems or difficulty accessing these or making payment, please contact Sam Smiley, Professional Standards Dept.

The UK Financial Intelligence Unit (UKFIU) in conjunction with the Office for Professional Body AML Supervision (OPBAS) has issued Guidance on how to submit better quality suspicious activity reports (SARs). This document aims to provide AML supervisors, including the Professional Body Supervisors with guidance on how they and their supervised populations should submit better quality SARs to the National Crime Agency (NCA). This Guidance explains what information should be included within the SAR and provides examples of good practice.

Upcoming SARs webinar (UK) – 27 April (12-1.30) You are invited to a webinar on SARs for the accountancy sector, with presentations from MLROs from the larger UK firms and the UKFIU. The webinar is aimed at MLROs to help them understand their obligations. The webinar will cover the following topics: The key money laundering risks in the accountancy sector; The role and responsibilities of the MLRO and Nominated Officer; What constitutes suspicion, what is a Defence Against Money Laundering (DAML) and a practical explanation of the relevant legislation; Real-life examples and case studies; Top tips on filing a good SAR and a reminder on how to report one externally to the NCA; 30 minutes Q&A The webinar is free and firms can sign up at the link below (ICAEW offered to run the event and give behind-the-scenes support): Suspicious Activity Reports (SARs) and the accountancy sector (icaew.com)

Following a Joint Insolvency Committee consultation changes are being made to three Statements of Insolvency Practice. The changes will take effect from the 1st April 2021. The updated SIPs are: SIP 3.2 Company Voluntary Arrangements SIP 7 Presentation of financial information in insolvency proceedings SIP 9 Payments to insolvency office holders and their associates from an estate (Northern Ireland) SIP 9 Payments to insolvency office holders and their associates from an estate (England)  SIP 9 Payments to insolvency office holders and their associates from an estate (Scotland) Insolvency Practitioners should familiarise themselves with the new SIPs prior to their effective date of commencement.  These SIPs were issued for consultation in May 2020 and detailed background information is available here.

Professional Standards recently attended a presentation by the Metropolitan Police on key crime indicators within the accountancy sector. The information was based on real-life investigations and focussed on red flags that accountants may come across when reviewing accounting records which may in certain circumstances raise suspicion, including: Lack of sales records Income received at odd times of day Lack of assets Lack of staff costs Loans For more information click here. If you have knowledge or suspicion of money laundering this should be reported to the firm’s MLRO who will consider whether a Suspicious Activity Report needs to be made to the National Crime Agency.

The Money Laundering, Terrorist Financing and Transfer of Funds (Information on the Payer) Regulations 2017 (as amended) require firms to take the appropriate steps to identify and assess the risk that they could be used for money laundering, including terrorist financing. The Accountancy AML Supervisors Group (AASG) in the UK has identified those circumstances where there might be a high risk of money laundering or terrorist financing in the accountancy sector. This Guidance also reflects the key risks and threats highlighted within the UK’s National Risk Assessment 2020.

From 1 January 2021 separate Audit Regulations and Guidance for the UK have been introduced.  UK specific Audit Regulations and Guidance are necessary to reflect the new relationship between the UK and EU as a consequence of Brexit.  The draft UK Audit Regulations have been published on the Institute’s website and are applicable from 1 January 2021.  Approval of the final UK Audit Regulations and Guidance is pending. From 1 January 2021, firms and individuals registered by the Institute as statutory audit firms and statutory auditors in the UK will comply with the new UK Audit Regulations and Guidance.   The Institute’s Audit Regulations and Guidance effective from 1 January 2020 continues to apply in the Republic of Ireland (‘ROI’) but will no longer apply in respect of the UK after 31 December 2020.    From 1 January 2021 an audit firm registered by the Institute in both ROI and the UK will have to ensure compliance with two sets of Audit Regulations. The UK Audit Regulations and Guidance do not bring significant changes for UK registered audit firms. The main change for firms pertains to the eligibility of EEA auditors and EEA audit firms for inclusion in the majority of owners and managers of a UK audit firm.  We consider that this change is unlikely to have an impact on firms currently registered by the Institute for audit purposes in the UK.  The ownership rules for a UK registered audit firm from 1 January 2021 require that the majority of the voting rights on the ownership body and management body of the firm are held by: Individuals holding an audit qualification from a UK RSB (including Chartered Accountants Ireland) Audit firms approved by a UK RSB (including Chartered Accountants Ireland) Individuals who hold EEA qualifications, who have passed or applied to sit a relevant aptitude test by 31 December 2020. Until 31 December 2020 EEA auditors and EEA audit firms could also be counted towards the majority of owners and managers in a UK audit firm.  The change in the ownership rules impacts firms who count EEA qualified auditors (who are not qualified by a UK RSB) and EEA audit firms in their majority of qualified owners and managers.  From 1 January 2021 the qualified majority of owners and managers can only include EEA auditors (who are not qualified by a UK RSB) if the EEA auditors have passed, or applied for, or passed, a relevant aptitude test before 31 December 2020.

As the end of the Brexit transition period approaches on 31 December 2020, clarity is finally emerging in relation to the implications for audit registration in Ireland and the UK after the transition period. The important news for auditors and audit firms registered by the Institute is that the status quo will continue for the majority of firms in both Ireland and the UK after 1 January 2021. Irish audit registration – after the Brexit transition period Since 2018 Brexit has cast uncertainty over the position of ‘UK-based’ (however interpreted) auditors registered by the Institute vis-à-vis eligibility to audit Irish entities post Brexit.  The Institute has kept members informed of any developments in this regard and has outlined our position that there is no basis for the Institute to remove its ‘UK-based’ auditors from the Irish audit register as a consequence of Brexit unless there is a change in Irish company law or a formal direction from IAASA to the Institute.    Recent engagement with IAASA has confirmed that there will not be any legislative change or regulatory direction in this regard. Therefore the status quo will continue in Ireland from 1 January 2021 for the Institute’s UK-based auditors and audit firms, as long as those individuals and firms continue to meet the eligibility criteria (unchanged) set out in the Institute’s Audit Regulations and the Companies Act 2014.  The Professional Standards department will be writing to audit compliance principals of statutory audit firms in more detail in the coming weeks. It is welcome news for the auditors and audit firms registered by the Institute in Ireland and based outside of the jurisdiction, that there will be no change to their status on the Irish audit register from January 2021. In the longer term, however, Brexit may impact on the number of UK-based firms on the Irish audit register as the audit regulatory requirements in Ireland and the UK continue to diverge over time.   Audit firms who are registered in Ireland but do not have any Irish audit clients may find that the burden of complying with distinctly Irish regulatory requirements is no longer worthwhile and may choose to cease their Irish audit registration. Related Matters regarding Irish audit registration While not of direct relevance to Institute members and audit firms, it is worth mentioning that Irish company law provides a mechanism for approval of third country auditors in Ireland.  From 1 January 2021 auditors based in the UK who are not a member of the Institute or another Recognised Accountancy Body would have to avail of this mechanism if they want to be eligible to audit Irish entities. The Companies Act 2014 in Ireland provides for the approval of third country auditors as Irish statutory auditors where certain criteria are met.  These criteria include the existence of reciprocal arrangements regarding auditor approval between Ireland and the third country concerned as well as the completion of an aptitude test by the third country auditor.  The Companies Act 2014 also allows for exemption from that aptitude test to be granted in certain circumstances.  We understand that IAASA and the Financial Reporting Council (‘FRC’) in the UK are working on developing reciprocal arrangements which would support the operation of a regime in Ireland for approving third country auditors from the UK.   The Institute currently administers an aptitude test for third country auditors and is engaging with IAASA in relation to guidelines for granting exemptions from the aptitude test. UK audit registration – after the Brexit transition period After 31 December 2020, audit registration in the UK will continue without interruption for individual statutory auditors (responsible individuals) registered by Chartered Accountants Ireland given the status of the Institute as a Recognised Supervisory Body (‘RSB’) in the UK, regardless of whether the responsible individual is based in the UK or Ireland.  There will be no change to the UK audit registration of the majority of audit firms registered in the UK by Chartered Accountants Ireland regardless of whether the audit firm is based in Ireland or in the UK.  Audit firms currently registered in the UK by the Institute can retain UK audit registration after 31 December 2020 if the UK firm ownership rules are met.  The ownership rules for a UK registered audit firm after 31 December 2020 will require that the majority of the voting rights on the ownership body and management body of the firm are held by: Individuals holding an audit qualification from a UK RSB (including Chartered Accountants Ireland) Audit firms approved by a UK RSB (including Chartered Accountants Ireland) Individuals who hold EEA qualifications, who have passed or applied to sit a relevant aptitude test by 31 December 2020. The change in the ownership rules impacts firms who count EEA qualified auditors (who are not qualified by a UK RSB) and EEA audit firms in their majority of qualified owners and managers.  From 1 January 2021 the qualified majority of owners and managers can only include EEA auditors (who are not qualified by a UK RSB) if the EEA auditors have applied for, or passed, a relevant aptitude test before 31 December 2020. This change may affect a small number of firms.  

The UK Financial Intelligence Unit (FIU) has produced 3 Podcasts on SARS and these are available free online.  We strongly encourage you to take time to listen to these useful and informative podcasts. Podcast 1: SARs Frequently asked Questions Podcast 2: How SARs reporters can help combat Modern Slavery and Human Trafficking Podcast 3: What makes a good quality SAR?

Insolvency Monitoring - Common findings from RoI Visits The Professional Standards Department is hosting two Insolvency related CPD online webinars.   The first online webinar, ‘Insolvency Monitoring - Common findings from RoI Visits’, scheduled for 16 November at 12:00 – 13:00, will focus on the common findings and issues identified during insolvency monitoring visits, which regularly feature in visit reports issued after each visit.  You can register, free of charge, by clicking here. The second online webinar, ‘Insolvency Monitoring - Findings with remuneration approval procedures’, scheduled for 14 December at 12:00 – 13:00, will focus on how to ensure remuneration approval is obtained correctly in accordance with the current legislation and Statement of Insolvency Practice S9B. You can register, free of charge, by clicking here. These webinars are hosted by Professional Standards and are both free of charge.  They are designed for all Insolvency Practising Certificate (IPC) Holders and aim to help prepare for future visits and to give practical advice on the most common areas of weakness found during insolvency visits. We would encourage all IPC holders to attend both webinars as practical updates to processes and procedures will be covered to ensure full compliance with legislation, regulations and SIPs moving forward. Members can claim 1 hour structured CPD per webinar

Your Individual Annual Return 2020 is available for completion online.  Please be reminded that this is due to be submitted by 30 October 2020.Click here for your Individual Annual Return.We appreciate that this is a difficult period for members due to the Coronavirus and that members will be prioritising matters differently than they would in normal times. If unable to meet this timescale please contact Individual Annual Return.

The UK Government has announced its intention to use the power in the Corporate Insolvency and Governance Act 2020 to require independent scrutiny of pre-pack sales in administration to connected parties. The Pre-Pack Sales in Administration Report sets out the findings and recommendations of a review of pre-packs carried out by Government primarily focussing on whether or not to regulate or ban sales in administrations to connected persons. Published with this report are the draft regulations , which Government intends to lay before Parliament. A summary of the proposed regulatory framework is set out below: The regulations will apply where there is a disposal in administration of all or a substantial part of a company’s assets. An administrator will be unable to dispose of property of a company to a person connected with the company within the first eight weeks of the administration without either the approval of creditors or an independent written opinion. The connected party purchaser will be required to obtain the written opinion. The provider of the opinion must be independent of the connected party purchaser, the company and the administrator and must meet certain eligibility requirements. The administrator must have no reason to believe that the opinion provider is not independent of the connected party or does not meet the eligibility requirements. The opinion provider will provide a written report to state that either the case is made for the disposal or that the case is not made. A connected party purchaser may obtain more than one report. An administrator must consider a report from an opinion provider. Where a report states that the case is not made for the disposal, an administrator can still proceed with the disposal but will be required to provide a statement setting out the reasons for doing so. An administrator will be required to send a copy of the report(s) to creditors of the company and to Companies House.

UK Financial Intelligence Unit invites you to a Webinar on the use of Glossary Codes when submitting a SAR, on Wednesday 14 October 2020 at 2pm. We strongly recommend that you join this webinar.   On Wednesday 14th October at 2pm the UKFIU will be hosting a SAR Glossary Codes Webinar – the benefits to the SAR Regime. Topics to be covered: Key benefits of using glossary codes Overview of the main glossary codes used How SARs are fast tracked - Denise Napper, Head of SARs Enquiry Action Team Reporter view of good use of glossary codes Q&A Session While the event is aimed at UK SAR reporters/supervisors, it is open to anyone with an interest in the topic. Please email UK Financial Intelligence Unit to request an invite before close of play 13/10/2020.

Chartered Accountants Ireland is pleased to announce the publication of the draft AML Guidance for the accountancy sector.This is draft guidance pending approval from HM Treasury. This guidance is based on the law and regulations as of 10 January 2020 – this incorporates amendments required as a result of the UK’s transposition of the 5th Money Laundering Directive. A brief overview of the main changes is available here.