What is a Money Laundering Reporting Officer?

In line with Regulation 20 of the Money Laundering Regulations 2007, every firm within the regulated sector is required by law appoint an MLRO, or Money Laundering Reporting Officer. As well as this, the individual your firm selects to take on the role of MLRO must be approved by the FCA.

According to the FCA, the MLRO should “act as the focal point within the relevant firm for the oversight of all activity relating to anti-money laundering.”

Simply put, if you suspect that money laundering activity is taking place within your business, you can disclose these concerns to the MLRO. It’s the MLRO’s responsibility to assess this risk, take reasonable precautionary measures and inform the relevant law enforcement; in the UK, this is the NCA (National Crime Agency).  

What makes a good MLRO?

Taking on the role of MLRO is a significant responsibility – if the FCA finds that the MLRO in question has failed to keep the business AML compliant, the penalties can include steep fines, or even a prison sentence.

Asides being FCA-approved, there are no legal criteria for your firm’s MLRO to meet, but it’s recommended that they’re a senior figure with a certain amount of authority. This is because they’ll need enough influence within the business to do the following:

-         Access all customer and client files, so they can make an informed decision.

-         Access all of the company’s financial records.

-         Implement AML compliance strategies throughout the firm.

-         Feel comfortable working alongside other senior management to ensure these AML measures are put in place.

-         Have an understanding of legal professional privilege, which must be considered whenever disclosures are made to the NCA. 

Honesty and integrity are just as important in an MLRO as seniority, but it’s also vital that your appointed MLRO is approachable, so that anyone with suspicions about money laundering feels comfortable reporting to them.  

What is a deputy MLRO?

Deputy MLROs are most common in large firms where the task of maintaining AML compliance and managing money laundering risks is too great for one person.

In this instance, a deputy MLRO might also be appointed, to assist the MLRO with establishing anti-money laundering strategies in the business. The deputy MLRO can also share the responsibility of passing information about suspicious activity to the NCA.

Management Support for MLROs

In order for the MLRO in your business to do their job successfully and efficiently, they need the support of senior management. Here are some of the most crucial ways that they can contribute:

-         Helping to implement a formal AML strategy for the business to follow.

-         Setting an example to the rest of the firm in terms of AML compliance.

-         Assisting the MLRO with risk-assessment processes.

-         Helping to obtain the time and financial resources that proper AML compliance procedures require.

-         Encouraging other staff members to utilise the MLRO. 

Where SmartSearch Comes In

Being a complete AML solution, SmartSearch is ideal for MLROs looking for a comprehensive platform where they can carry out all their AML checks in one place. We cover everything from initial checks right through to ongoing monitoring, so that you’re able to make an informed decision about any customer or client that poses a risk to the financial integrity of your business.