Navigating The Complexity of Ownership From The Lens of Sanction By Extension

Download Whitepaper cross

We see you are from -

We offer parity pricing to make our services accessible beyond borders. 

Money Laundering Reporting Officer (MLRO)

16 October, 2023

blog_image blog_image

Financial institutions and other money service businesses are becoming hotspots for money laundering, terrorism financing, and other illicit activities. This necessitates the firms to have robust security systems and skilled staff to protect them from financial crimes such as money laundering. 

In 2007, section 59 of the UK’s Money Laundering Regulations mandated employing an MLRO for all relevant firms. A Money Laundering Reporting Officer (MLRO) is the employee responsible for combating financial crime in the designated firms.

What is an MLRO?

An MLRO is responsible for fighting money laundering and terrorism financing in financial firms and other companies. The primary duty of an MLRO is to notify the relevant bodies about any suspicious activity detected to mitigate the risk of the company becoming a fertile ground for illicit activities. 

MRLO is an individual who plays a crucial role in determining AML reporting that can impact a firm’s relationship with its clients and susceptibility to legal, criminal, and disciplinary action. They monitor all activities performed within the Anti-money Laundering (AML) framework. An MLRO should have the power to access customers’ and businesses’ confidential data to identify any risks they may pose and make informed decisions. 

In case there is a group of companies, employing one MLRO officer is enough to oversee all anti-money laundering processes. Business owners obligated to have reporting officers within their firms must understand the requirements of designating an MLRO. 

Moreover, an MLRO can act as a Nominated Officer, who is responsible for monitoring businesses’ activities, reporting, identifying any suspicious attempts, and reaching out to the National Crime Agency (NCA) for support in case of any illicit activity.

KYB knowledgebase infograph 10

Who Can Become An MLRO?

Firms should get approval from the Financial Services Authority (FSA) before appointing an individual as a Money Laundering Reporting Officer. An MLRO works in a senior position and has authority over different departments and teams, who must report relevant happenings to him regularly. Although there are no specified criteria on who can become the MLRO, some of the suitable qualifications to be eligible for an MLRO include:

  • Having all the necessary and relevant training prior to applying to the Financial Services Authority.
  • Skilled and well-educated in the niche of the company they are going to work with and must have a background in anti-money laundering compliance.
  • Having knowledge of the latest regulations, policies, sanctions, market trends, and AML processes.
  • Attending all the required and credible courses in their relevant field. The Financial Services Authority does not suggest any particular course, but those with assessments are preferable.
  • Having experience in the legal field is considered a plus point.

For small-sized firms, the owner and the executive of the company can serve as a Money Laundering Reporting Officer

What are the Responsibilities of MLRO?

A Money Laundering Reporting Officer checks whether the suspicion arises enough to generate a money laundering report and reveal it to the relevant bodies. Some of the main MLRO responsibilities include: 

  • Risk assessment to check and report different levels of risk that business entities may pose. 
  • Check and plan revised regulations to develop robust anti-money laundering policies and procedures and ensure their effective implementation.
  • Preventing money laundering, terrorism financing, and fraud is also the responsibility of an MLRO.
  • Should introduce and implement an in-house AML training program.
  • Enforce implementation of Know Your Customer (KYC), Know Your Business (KYB), and AML procedures.
  • Ensure that customers are aware of what Customer Due Diligence (CDD) is and when it is executed. Customer due diligence is a crucial part of AML KYC compliance, which helps the business know who its clients are and decide whether to accept them based on the company’s risk appetite.
  • Should be able to analyze the money laundering and other risks identify and analyze any loopholes in the firms’ compliance procedures.
  • Should ensure that the business complies with anti-money laundering regulations. Otherwise, the company’s MLRO can be subject to heavy fines or severe sanctions.
  • Reporting to relevant bodies outside of the firm, such as the Financial Conduct Authority (FCA), regularly and to senior authorities annually.

Why Do Businesses Need an MLRO?

If you are running a business in a sector regulated by AML law, it is legally binding to employ an MLRO. Having a Money Laundering Reporting Officer facilitates firms in their AML processes, including:

  • Keeps your firm up to date with the evolving regulatory requirements.
  • Ensures that your company’s systems and processes comply with the KYC and AML requirements.
  • Provides clarity on whom to contact in case of any AML queries.
  • Takes the responsibility for reporting as well as audits.
  • Alerts the law enforcement body where there is a suspicion of money laundering.

Latest Posts

15 June, 2024


BOI Reporting: Mitigating Non-Compliance Challenges in Corporate World

05 June, 2024


Top 5 Signs Indicating Trade-Based Money Laundering

31 May, 2024


What is Corporate Compliance? A Comprehensive 2024 Guide

Recent Blogs

No posts found.