As mentioned in our article "5 Essential Points for Hiring a MLRO", the Money Laundering Reporting Officer (MRLO) was always an important role, but has gained even more significance recently. The number and size of fines for anti-money laundering (AML) and financial crime compliance (FCC) breaches is increasing, and money launderers and criminals are exploiting the coronavirus pandemic to ramp up attacks on firms.
The MLRO is a senior figure who will represent your firm. This requires the FCA's 'fit and proper person' approval: CF11 under the outgoing regime, SMF17 under SMCR. This means that a good MLRO must behave in a way that is appropriate to their position.
Purpose of the role
The main focus of the MLRO role usually is to establish and effective compliance culture within a firm for fighting against money laundering, terrorist financial, and other forms of financial crime. Because of the role's high importance, a MLRO must build strong relationships with key stakeholders, senior management and a company's board to ensure they are fully aware of all anti-money laundering matters.
The MLRO's knowledge must include the technical side of reporting and record-keeping requirements like Financial Conduct Authority (FCA) suspicious transaction and order reports (STORs) and National Crime Agency suspicious activity reports (SARs).
A new MLRO needs sufficient experience to overhaul protocols and procedures to reduce the risk of breaches and avoid fines.
They must also know how to manage a team. That includes knowing how to delegate and how to develop talented subordinates.
Money launderers are always seeking new channels to exploit. An MLRO must not just know launderers’ latest methods, but have a keen sense of what might be a new ruse. That said, they must be pragmatic and keep a sense of proportion. They should not immediately ‘red flag’ every little thing.
Comply at all times with the Statements and Code of Practice for Approved Persons
Implement Anti-Money Laundering and counter-terrorist financing policies aligned with evolving regulatory obligations
Oversee all aspects of Financial Crime related regulation, policies, procedures and controls
Daily management of all financial crime prevention efforts. This implies providing updates, escalating issues and highlighting areas of interest to key stakeholders
Establish and maintain appropriate risk-based monitoring processes
Oversight of AML/KYC and CDD policies and procedures . Review client files to assess whether they are in line with regulatory requirements
Provide support, guidance and training for team members to enhance their knowledge financial crime related matters
Manage and mentor AML teams
Keep up to date with statutory and regulatory developments in AML.
Take charge of anti-money laundering training to ensure everyone in the firm receives appropriate training which meets regulatory requirements