The overall responsibility for money-laundering prevention lies with senior management and controllers of an institution.
The Money Laundering Reporting Officer (MLRO) is responsible for the oversight of the institution’s anti-money laundering activities and is the key person in the implementation of the anti-money laundering strategy of the institution.
- The MLRO will act as the ‘appropriate person’ required to be appointed to receive and process internal and external suspicious transaction reports. The MLRO will also act as a central point of contact with the law enforcement agencies in order to handle the reported suspicions of their staff regarding money laundering.
- The MLRO needs to be senior to be free to act on their own authority and to be informed of any relevant knowledge or suspicion in the institution. The type of person appointed as MLRO will vary according to the size of the institution and the nature of its business, but he should be sufficiently senior to command the necessary authority.
Larger institutions may choose to appoint a senior member of their compliance, internal audit or fraud departments. In small institutions, it may be appropriate to designate the Operations Manager. When several subsidiaries operate closely together within a group, there is much to be said for designating a single MLRO at group level.
- Where an institution has branches or offices in other jurisdictions, the functions of the MLRO may be delegated to other persons within those branches or offices. Where such functions are delegated, the regulatory authorities will expect the MLRO to take ultimate responsibility for ensuring that the requirements of the AML requirements are applied to those operations.
- A significant degree of responsibility. He is required ‘to determine’ whether the information or other matters contained in the transaction report he has received gives rise to knowledge or suspicion that a customer is engaged in money laundering.
- He must take steps to validate the suspicion in order to judge whether or not a report should be submitted to FIC. In making this judgement, he must consider all other relevant information available to him concerning the transaction or applicant to whom the report relates. This may require a review of other transaction patterns or businesses in the same name, the length of the business relationship and referral to identification records held. If after the review, he decides that there are no facts that would negate the suspicion, then he must disclose the information to FIC. The MLRO also needs to pass on FIC issues that he/she thinks appropriate and can be expected to liaise with FIC on any questions of whether to proceed with a transaction in the circumstances.
- The MLRO must have reasonable access to information that will enable him to undertake his responsibility. The MLRO should keep a written record of every matter reported to him, of whether or not the suggestion was negated or reported, and of his reasons for his decision.
- The MLRO should ensure that the institution provides training for its employees to enable them to comply with the provisions of the FICA Act and the FICA Internal Rules applicable to the institution.
- The MLRO will be expected to act honestly and reasonably and to make his determinations in good faith. Provided the MLRO or an authorised deputy does act in good faith in deciding not to pass on any suspicions report, there will be no liability for non-reporting if the judgement is later found to be wrong.
- Care should be taken to guard against a report being submitted as a matter of routine to FIC without undertaking reasonable internal enquiries to determine that all available information has been taken into account.
- Contributing to the design, implementation and maintenance of internal AML compliance manuals, policies, procedures and systems, including, if applicable:
- ensuring AML compliance is measured and rewarded in the performance review process;
- processes to allow staff to report violations of the AML programme confidentially to the MLRO, with alternative arrangements if the MLRO is implicated.
- Updating corporate knowledge on ML/TF risks the FSP may reasonably face, including any relevant legislative developments and AML/CTF publications, for example from the Financial Action Task Force (www.fatf-gafi.org) or the Financial Intelligence Centre.
- Providing leadership and contributing to a culture of AML compliance within the FSP.
- If relevant conducting due diligence and ongoing evaluation on any third-party AML compliance-related service providers.
- If appropriate, coordinating periodic internal reviews of AML compliance at branch offices or permanent establishments in a foreign country, if applicable.