MLRO meaning: What is an MLRO?
The meaning of MLRO is Money Laundering Reporting Officer. This is a position within a business that is responsible for ensuring ongoing compliance with Anti-Money Laundering (AML) regulations and reporting any suspicious activity related to money laundering or terrorism financing. In the UK, the MLRO is required to report suspicious activity to the National Crime Agency (NCA), which is the UK’s Financial Intelligence Unit (FIU).
What is the role of a Money Laundering Reporting Officer (MLRO)?
The role and main responsibilities of an MLRO include:
- Developing and implementing the business’ AML policies, procedures, and controls to counteract financial fraud
- Monitoring transactions and customer activity to detect any suspicious behaviour or transactions that may be related to money laundering or terrorism financing
- Reporting any suspicious activity to the relevant authorities, such as the National Crime Agency (NCA).
- Conducting internal investigations and risk assessments to identify any potential areas of vulnerability or weakness in the business’ AML policies and procedures
- Ensuring that all employees are fully trained and aware of their responsibilities and obligations to report and tackle money laundering
- Keeping up to date with any changes to AML regulations and making any necessary changes to the business’ AML programme
- Implement and own the business’ AML software (if any is used)
How does an MLRO differ from a compliance officer?
An MLRO and a compliance officer are two distinct roles, however there is usually some overlap in their duties and responsibilities depending on the size, type, and operations of the business.
Although there is overlap, there is a key difference between an MLRO, and a compliance officer which is their area of focus. The primary responsibility of an MLRO is to ensure compliance with ever-changing anti-money laundering (AML) regulations and to report any suspicious activity related to money laundering or terrorism financing. However, a compliance officer’s role is less specific and ensures that the business complies with all relevant laws and regulations that apply to its operations, not just those related to AML.
MLROs typically own the day-to-day management and implementation of the business’ AML strategy, including developing policies and procedures, monitoring transactions and customer activity for suspicious behaviour, customer remediation and reporting suspicious activity to the relevant authorities.
In contrast, a compliance officer’s role usually involves broader responsibilities such as ensuring that the business complies with data protection, health and safety, and employment laws, among general compliance regulations. Compliance officers may also be responsible for ensuring the business’ policies and procedures are effective and up to date.
Smaller businesses will usually combine the roles of MLRO and compliance where there is less need for specialisation. However, in larger businesses and ones that are heavily regulated industries such as banking typically separate the roles to ensure each area has sufficient attention, expertise, and responsibility. Specifically in the UK under the UK’s Money Laundering Regulations 2007, all businesses within the regulated financial services industry are required to appoint an MLRO.
When might a business have a deputy MLRO?
A deputy MLRO is a role that supports the MLRO in carrying out their duties. The deputy MLRO is typically appointed to act on behalf of the MLRO in their absence and assist them in fulfilling their responsibilities. The specific duties of a deputy MLRO may vary depending on the organisation and its structure, but they generally involve helping to develop and maintain AML/CTF policies, conducting training for staff, and ensuring that the organisation’s risk assessment processes are effective.
While the MLRO has the ultimate responsibility for AML/CTF compliance, deputy MLROs plays a crucial role in supporting and assisting the MLRO in fulfilling these duties. The distinction lies in the hierarchy of roles, with the MLRO holding the primary responsibility, and the deputy MLRO acting in a supporting capacity. Both positions are important for ensuring that your organisation is vigilant against money laundering and terrorist financing activities.
Is the MLRO personally liable?
The specific laws and regulations governing anti-money laundering and the role of the MLRO can vary by jurisdiction and therefore the potential personal liabilities may be different in relation to that. However, in the UK, an MLRO takes on a significant amount of personal liability within their business. If the regulators find that their AML procedures are insufficient, it can lead to large fines and in extremely severe cases, even a prison sentence. Therefore, it’s important to stay up to date with compliance regulations.
What type of businesses need an MLRO?
According to gov.uk the types of business that need to register for money laundering supervision by HMRC and have a nominated MLRO are as follows:
- Money service businesses not supervised by the Financial Conduct Authority (FCA)
- High value dealers
- Trust or company service providers not supervised by the FCA or a professional body
- Accountancy service providers not supervised by a professional body
- Estate agency businesses
- Bill payment service providers not supervised by the FCA
- Telecommunications, digital and IT payment service providers not supervised by the FCA
- Art market participants
- Letting agency businesses
To help an MLRO meet their required compliance, they should use AML software like NorthRow to enhance their ability to identify, assess, and monitor their customers, while adhering to the latest anti-money laundering regulations.
Last updated: Thursday 16th November 2023