Money laundering reporting officers

Money laundering reporting officers

Contents

What is a money laundering reporting officer?

This term (usually abbreviated to MLRO) is used to describe the nominated officer appointed under Regulation 20(2)(d) of the 2007 Regulations and as referred to in Section 331 Proceeds of Crime Act 2002(POCA).

Why have an MLRO?

Regulation 20(2)(d)(i) requires that all businesses within the regulated sector must have a nominated officer to receive Disclosures under Part 7 of POCA and the Terrorism Act, and to make disclosures to the Serious Organised Crime Agency (SOCA).

Regulation 20(3) provides that there is no requirement to have a nominated officer in the regulated sector if you are an individual who provides regulated services but do not employ any people or act in association with anyone else.

Who should be an MLRO?

The role of the MLRO carries significant responsibility and should be undertaken by an appropriately experienced individual.

An MLRO should be of sufficient seniority to make decisions on reporting which can impact a business's relations with its clients and its exposure to criminal, civil, regulatory and disciplinary sanctions. They should also be in a position of sufficient responsibility to enable them to have access to all of the business's client files and business information to enable them to make the required decisions on the basis of all information held by the business.

Businesses authorised by the Financial Conduct Authority (FCA) (one of the successors to the Financial Services Authority) will need to obtain the FCA's approval to the appointment of the MLRO as this is a controlled function under section 59 of the Financial Services and Markets Act 2000.

Role of the MLRO

An MLRO is responsible for ensuring that, when appropriate, the information or other matter leading to knowledge or suspicion, or reasonable grounds for knowledge or suspicion of money laundering is properly disclosed to the relevant authority. The decision to report, or not to report, must not be subject to the consent of anyone else. The MLRO will also liaise with SOCA or law enforcement on the issue of whether to proceed with a transaction or what information may be disclosed to clients or third parties.

The size and nature of some businesses may lead to the MLRO delegating certain duties regarding the business's anti-money laundering/counter terrorist financing obligations. Delegation does not relieve the MLRO of responsibility. In some large businesses, one or more permanent deputies of suitable seniority may be appointed. The reporting channels should be well known to all relevant employees. All businesses will need to consider arrangements for temporary cover when the nominated officer is absent.

MLRO's may also take responsibility for:

  • Training within the business
  • Advising on how to proceed with work once an internal report and/or SAR has been made in order to guard against risks of tipping off or prejudicing an investigation
  • The design and implementation of internal anti-money laundering systems and procedures

If this role is not undertaken by the MLRO, these responsibilities should be taken on by another sufficiently senior and skilled person within the business. This person should work closely with the MLRO.