What is a Money Laundering Reporting Officer (MLRO)?
The MLRO - sometimes referred to as a 'nominated officer' - provides oversight for a financial institution's AML compliance. The role carries with it a great deal of responsibility: MLRO's need access to their institution's financial records in order to inform oversight and strategic decisions around AML and financial crime activities.<br/><br/>
The duties of the MLRO carry serious legal obligations. An MLRO can face steep fines, or even a prison sentence, if they are found to have failed in to maintain satisfactory compliance around their firm's AML protections and processes. As such, the MLRO is an extremely important appointment for a financial institution and it is vital that senior management carefully consider who should take up the role.<br/><br/>
The specific role of an MLRO is defined in the Financial Conduct Authority (<a href="/glossarycollection/financial-conduct-authority" style="color:#48277C;" target="_blank" title="Financial Conduct Authority"><u>FCA</u></a>) Handbook. In addition to ensuring their firm's compliance with AML controls, MLROs have a duty to deal with any information, knowledge or suspicion of money laundering - and to properly disclose such matters to the appropriate authorities. In the UK the appropriate authority is the National Crime Agency (NCA).<br/><br/>
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 should also participate in the ongoing review of their 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 also need to provide training to colleagues within their firm.<br/><br/>
The FCA requires that a person reported as MLRO must have sufficient authority to carry out their duties effectively. MLROs need to advise senior management on their firm's risk of exposure to money laundering, and how to manage this risk. It is acceptable for an MLRO to delegate responsibilities to colleagues or appoint deputies to manage their workload.