MLRO: A Guide to Know the Key Responsibilities and Reporting Essentials

An MLRO Report commonly accompanies financial crime-related updates throughout the year and is presented to senior management. It should make sense, then, that there will be no surprises on the contents of an MLRO Report. Its purpose is to:

• Capture the responsibilities of the money laundering officer and team
• Audit the organization’s anti-money laundering and counter-terrorism financing controls
• Advisory on the senior management and the board
• Be open, honest, and accurate
• Intrude on breaches and lessons learned
• Identify limitations in systems and required action
• Advise on course of action for risk mitigation
• Provide stakeholder buy-in for proposals.

What is MLRO?

The Money Laundering Reporting Officer (MLRO) performs senior duties in the company, including overseeing all anti-money laundering (AML) dimensions. This person would be highly concerned with ensuring the firm’s compliance with all AML obligations and procedures applicable to the company. Therefore, the appropriate authority and seniority is needed by the MLRO for this overview to challenge anything that goes amiss with frontline or senior management decisions and which neither fits with the firm’s risk appetite nor matches post controls. 

If the MLRO feels the need to report something, then it cannot be overruled, but, unfortunately, it does happen. Management is able to change the risk assessment, the risk appetite, and subsequent controls to back up another view but has to do so reasonably and in writing. 

What Are MLRO Responsibilities?

Here is a checklist for the 20 most critical responsibilities an MLRO would likely shoulder.

Each and every company has a different organizational structure; hence, this list can be unique for personal self-assessment or for helping to design the role from scratch in comparison with other organizations. 

1. Act as an approved individual to perform Controlled Function SMF17 (prevention of money laundering).
2. Draft and maintain anti-money laundering and counter-terrorist financing policies, aligning them with the changing statutory and regulatory measures, including obligations.
3. Support and coordinate the management’s major focus on the money laundering risk within each business area. 
4. Cultivate and maintain an effective culture in the anti-money laundering and counter-terrorist financing compliance of management.
5. Ensure applicable recording of the risk management policies, risk assessment profile, and the enterprise application.
6. In consultation with the management, develop as well as maintain money laundering risk-based approaches for assessment of risks of the firm’s customers, products, or services.
7. Develop and maintain proportionate risk-based monitoring processes commensurate with the firm’s scale of operations, nature, and complexity. 
8. Create internal policies in compliance with the law and relevant industry guidelines. 
9. Encode both the risk-based strategies of the firm and the rationale for risk assessment and monitoring.
10. An immediate investigation of all internal suspicious activity reports was received. 
11. File a SAR with the respective law enforcement agency concerning all that have a solid basis as suspected. 
12. These should let all of the staff know what their obligations are according to the firm’s policies and procedures and how the basis for the firm’s risk-based approach is understood and applied. 
13. Generate compliance from all staff members to the policy above and continue monitoring operations and the evolution of the policy to this end.
14. Ensure that the required staff is adequately trained in money laundering and terrorist financing prevention, that the training meets the appropriate standards and scope, and that proper training records are kept. 
15. Reviewing the conditions of policies for compliance with money laundering and money laundering counter-finance terrorism, as well as making recommendations for actions necessary to correct deficiencies in policies, procedures, systems, or controls, and following up on them. 
16. Represent the organization to all outside agencies, including but not limited to, regulators, law enforcement bodies, and any such third-party inquiries regarding money laundering. 
17. A timely response should be rendered to any reasonable request for information from regulatory or law enforcement authorities.

Advice for MLRO Reporting

It is important to note that a Money Laundering Reporting Officer’s (MLRO) report is not just a box-ticking exercise: it is, indeed, one of the most effective tools left in the hands of senior management and the board to control the organization. They can use this report as evidence of compliance and to understand the organization’s financial crime prevention capabilities.

This is a requirement that must be contained in a kyc aml report to be prepared and presented by the MLRO to senior management and the board on an annual basis. Possibly, the regulators and crime prevention agencies may have access to this document, if necessary.

Requirements of Reports Relevant to MLRO

Basic requirements for the MLRO reporting includes: 

• Details of Company
• Regulations
• MLROs, Resources, and Access
• Governance Structure
• AML & CTF systems and controls
• Customer due diligence
• Reporting and Training
• Summary and Recommendations

Final Words

That ensures comprehensive roadmap business enactments through compliance and is backed with several financial crime prevention practices. The Compliance officer or the MLRO is the primary contact with law enforcement agencies for requests for investigation.

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