In today’s high-tech world the Anti-Money Laundering and Counter Terrorist Financing rules are continually raising their head. The role of the MLRO has become increasingly important.
What is the Money-laundering Reporting Officer (MLRO)?
The role of MLRO was enshrined in UK law back as far as 2007. Well over a decade later, even the definitions of institutions like the Law Society can seem at best ambiguous or worst vague. That’s why the UK Government established OPBAS as part of its reforms to strengthen the UK’s anti-money laundering (AML) supervisory regime. OPBAS supervises the 25 professional body supervisors in the legal and accountancy sectors.
While our focus is on UK MLROs, the role of AML compliance officer is not all that different in other jurisdictions, especially across the EU, where the risk-based approach stands at the core of a financial crime risk mitigation programme, and until Brexit was a common area.
Many novices automatically assume that the first task is to undertake a financial crime risk assessment on the firm. It’s not. The first step one is to get clear guidance from senior management on the firm’s overall risk assessment and risk appetite, as these are the primary drivers for the financial crime risk assessment.
An MLRO also and should, as required by the Money Laundering Regulations (MLRs) have a clear and accurate role description, and that needs to be in place from day one.
Further accuracy is needed in clear written guidance of the risks their firm identifies, the level of appetite to take on the various risk levels and a commitment to provide adequate resources to manage these risks.
Everything from there on follows a relatively straight forward structured model.
The financial crime risk assessment has to reflect the overall risk assessment. Even though the MLRO will be tasked to develop and maintain a firm’s financial crime policy and procedures in response to the risk assessment, it is important to point out that the Board and Senior Management always remain ultimately accountable.
This means that the MLRO needs sufficient authority and seniority to challenge any decisions by either the frontline or senior management that may conflict with the firm’s risk appetite and subsequent controls. If the MLRO decides that something needs reporting, they must not be overruled, yet unfortunately still happens. The risk assessment, risk appetite and subsequent controls can be updated to support a different view, but these changes need to be reasoned and documented.
In this MLRO training module, you can find out how to;
- Understand – The role and responsibilities of the MLRO
- Determine – What staff should be on the lookout for
- Conduct – Conduct an assessment of Suspicious Activity Reporting (SAR)
- Document – What is required to be recorded.
- Identify – Identify when to make an external report to NCA
- Recognise – Recognise what a good external SAR report looks like
- Fulfil – Properly fulfil your obligation of external reporting to the National Crime Agency