All types of businesses, including regulated financial services, required to have a Money Laundering Reporting Officer (MLRO) in their team. The demand is backed up by such laws as the UK Money Laundering Regulations 2007 or the US Money Laundering Control Act. So, what is exactly this important job the MLRO does?
The Liabilities of a ML Reporting Officer
In general, the MLRO’s range of duties is rather wide. This person is responsible for monitoring lapses in a company’s AML system and everything related to it. The job involves the analysis of financial records, regulation of the company’s AML policy and financial crime prevention. The nominated officer liabilities are:
- Composing a consistent AML policy the company will pursue.
- Ensuring the firm’s AML compliance.
- Reporting suspicious activity to the law enforcement.
- Handling issues connected with a company’s senior management, e.g. disclosure of money laundering affairs.
- Giving expertise on the specifics of the financial and legal aspects of the company in question.
The responsibilities are more precisely designated by a local regulator the business responds to. For instance, in the UK the regulator is represented by the Financial Conduct Authority (FCA). However, there is still no specific checklist to choosing a MLRO.
How to Choose a MLRO
Hiring the ML reporting officer is tricky as it is sometimes not clear what kind of professional can do the job. Usually this position can be undertaken by a financial manager or lawyer. However, depending on an organization, the obligations and tasks may vary, and sometimes require collective work, involving senior management or other employees suitable to perform the task. In brief, the main qualities businesses should look for in a MLRO are the following:
- Knowledge of the local legislation, regulations and the ability to apply this knowledge appropriately;
- Awareness of the risks and the responsibilities involved;
- Experience in the AML/CTF field;
- Industry experience to understand how AML regulations apply to financial institutions;
- Strong influence on the workplace to have seniority and confidence to make final decisions.
The best companies could do is to find somebody who fits all of the criteria above, as failing to ensure your compliance with AML regulation can be a hard hit.
What If an ML Officer Fails: Non-Compliance Fees
MLRO is the very important person who makes sure of the company’s compliance. Their performance determines whether a business will or won’t receive a fine from an applicable regulator.
As an example, there is the Fourth Money Laundering Directive (MLD4) EU countries have to comply to. Firms and individuals who violate MLD4’s provisions will face a fine of at least €1 million or at least twice the amount of the benefit derived from the breach. The worst of the punishments being a prison sentence.
To stop worrying about compliance, business have to make a smart choice. Most importantly, they need to look at themselves and find a person who fits their flow, has the necessary skill set, understands the industry and the specifics of the business.