What Is A Money Laundering Reporting Officer ?
Under the UK’s Money Laundering Regulations 2007, all businesses within the regulated financial services sector are required to appoint a Money Laundering Reporting Officer (MLRO). The Data Cavalry can provide this important position within your organisation with our subject matter expert and MLRO outsourced services.
The MLRO – sometimes referred to as a ‘nominated officer’ – provides oversight for the firm’s anti-money laundering (AML) systems, and acts as a focal point for related inquiries. The role involves a significant amount of responsibility: MLROs must have access to their firm’s financial records in order to provide oversight and must make strategic decisions about activities relating to money-laundering and financial crime.
The duties of the MLRO may involve serious legal consequences which result in civil and criminal action. Our MLROs take on significant personal liability within the firm: if AML protections are found to have been insufficient, a firm’s MLRO may face steep fines and, in worst cases, prison sentences of up to 2 years.
MLRO is an extremely important position within a business, so it is vital that business understand and think carefully about the role and why this role should be outsourced to seasoned consultant services.
What does an MLRO do?
The role of Money Laundering Reporting Officer is defined by the Financial Conduct Authority and is outlined in the FCA handbook. In addition to ensuring the firm’s compliance with anti-money laundering controls, MLROs have a duty to deal with any information, knowledge or suspicion of money laundering – and properly disclose such matters to law enforcement, in this case the National Crime Agency (NCA).
From a practical perspective, MLROs are involved in designing relevant policies and procedures, record-keeping, filing internal and external reports, and ensuring due diligence is performed on customers and clients. MLROs will also participate in the ongoing review of the firm’s internal policies, procedures, and professional relationships, to ensure that money laundering and other financial crimes are detected and reported in compliance with the law. In this capacity, MLROs will need to provide training to your fellow colleagues within the business.
The FCA points out that a person appointed as MLRO should have sufficient authority to carry out their duties effectively. Crucially, MLROs will have to advise senior management about their firm’s risk of exposure to money laundering – and how to manage that risk.
MLROs must be able to assess money-laundering risk. This skill requires not only an understanding of criminal methodologies but an understanding of the behavior and business practices of customers and clients, who may themselves be exposed to risk.
Risk-assessment is so important for MLROs because they are responsible for calibrating the firm’s anti-money laundering systems to suit their compliance obligations. In practice, this means avoiding the dangerous legal liabilities of under-compliance, and the potentially costly burdens of over-compliance.