Money Laundering Reporting Officer: Roles and Responsibilities

Regulated businesses are required to have a Money Laundering Reporting Officer (MLRO), also known as an Anti-Money Laundering Reporting Officer (AMLRO), on their team, especially in the financial services industry. The demand is backed up legally in many jurisdictions—for example, by the UK Money Laundering Regulations 2007 or the US Money Laundering Control Act.

So, what exactly is an MLRO and why are they so important?

What is a Money Laundering Reporting Officer (MLRO)?

A Money Laundering Reporting Officer (MLRO) is a designated individual within a financial institution (or other AML-obliged company) responsible for overseeing and reporting suspicious financial activities to relevant authorities. Their goal is to ensure compliance with anti-money laundering (AML) regulations and implement effective measures to prevent money laundering, terrorist financing, and regulatory fines. This involves  reporting to regulators and auditors, monitoring client activity, and reviewing Suspicious Activity Reports, assessing the effectiveness of internal policies and procedures, and more.

Suggested read: Complete Guide to Suspicious Activity Reports

Which companies need an MLRO?

Companies operating in sectors vulnerable to money laundering activities always require a MLRO. This includes:

• financial institutions, like banks
• insurance companies
• crypto firms
• investment firms
• gambling platforms
• real estate agencies
• high-value goods dealers
• other industries involved in activities susceptible to money laundering.

Main responsibilities of an MLRO

The MLRO’s range of duties is wide. This generally includes:

• Analysis of financial records
• Composing a consistent AML policy the company will follow
• Ensuring AML compliance and monitoring lapses in a company’s AML system
• Reporting suspicious activity to law enforcement
• Handling issues connected with money laundering involving a company’s senior management, e.g. disclosure of money laundering affairs to authorities
• Providing expertise on financial and legal specifics

The more specific  responsibilities of an MLRO are designated by the local regulator the business responds to, like the Financial Conduct Authority in the UK—which provides a checklist on how a company needs to choose their MLRO.

Who can become an MLRO and what qualifications does an MLRO need to have?

It’s not always clear which kind of professional can take on the MLRO role. Usually this position is undertaken by a financial manager or lawyer. However, depending on the organization, the MLRO’s obligations and tasks may vary.

In brief, the main qualities that companies should look for in an MLRO are the following:

• Knowledge of local regulations and the ability to apply this knowledge appropriately
• Awareness of the risks and the responsibilities related to financial transactions and potential money laundering cases
• Experience in the AML/CTF field
• Understanding of how AML regulations apply to financial institutions
• Confidence to make final decisions.

How Sumsub can help

MLROs can have multiple responsibilities, including reporting to regulators and auditors, monitoring clients, establishing policies and procedures, and much more. All this can be a big challenge, especially at companies with a significant number of clients and volume. Sumsub can help reduce the workload, with automated background checks, AML screening against external databases, transaction monitoring and more. This can not only reduce workload for your staff but also reduce the risk of human error and provide you with additional checks that can enhance compliance. 

Plus, Sumsub can be set up and managed completely code-free by the MLRO, without any developers involved.

FAQ

• What is an MLRO in banking?

  In banking, the MLRO (Money Laundering Reporting Officer) is a designated individual responsible for overseeing and reporting suspicious financial activities to regulatory authorities to ensure compliance with anti-money laundering regulations.

• What’s the difference between an MLRO and an AML compliance officer?

  An MLRO (Money Laundering Reporting Officer) is the same as an AML (Anti-Money Laundering) compliance officer. The terminology differs by jurisdiction. 

• Who does the MLRO report to?

  The MLRO typically reports to senior management or the board of directors within a company. MLROs also have a reporting obligation to regulators, such as law enforcement agencies, or government bodies responsible for overseeing compliance with anti-money laundering regulations. These reports to regulators usually involve suspicious activity reports (SARs) and compliance updates as required by law.

• How often does MLRO report to the board?

  The MLRO reports to the board of directors on a regular basis, with the frequency of reporting determined by the organization’s risk profile and regulatory requirements, often ranging from quarterly to annually.