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Who should be a Money Laundering Reporting Officer (MLRO)?

It goes without saying that dedication, honesty and integrity are fundamental traits for an <a href="/glossarycollection/money-laundering-reporting-officer" style="color:#48277C;" target="_blank" title="Money Laundering Reporting Officer"><u>MLRO</u></a>. Similarly, senior management must be committed to giving their MLRO ongoing professional support.<br/><br/>

While there are no regulatory requirements for who should be MLRO, certain criteria should be considered when hiring for the role:<br/><br/>

Authority:<br/><br/>

An MLRO should hold a position of sufficient authority within the firm so they can access the files and information they need to carry out their AML duties. Their position should also allow them to design, implement and enforce their firm's compliance systems and procedures. Given the legal implications of the role and the personal liability MLROs assume, they need to hold a senior position and have the necessary knowledge and experience to make decisions with confidence.<br/><br/>

Risk Management:<br/><br/>

MLROs must be able to assess money laundering risk. This skill requires not only an understanding of criminal methodologies but an understanding of the behaviour and business practices of customers and clients - who may themselves be exposed to risk.<br/><br/>

Risk assessment is so important to MLROs because they are responsible for calibrating their firm's AML 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.<br/><br/>

Legal Privilege<br/><br/>

An MLRO should have a strong grasp of the concept of legal professional privilege since they might be required to disclose sensitive information to the National Competent Authority (<a href="/glossarycollection/national-competent-authority" style="color:#48277C;" target="_blank" title="National Competent Authority"><u>NCA</u></a>) - with legal implications for the firm and its employees. Knowing what information must be revealed, and when, is therefore a central focus of the MLRO mandate. With this in mind, while an MLRO does not necessarily need to be legally trained, knowledge of the field is useful. Alternatively, an MLRO might be given access to good legal advice about this aspect of their role.

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