Being a Money Laundering Reporting Officer (MLRO) isn’t an easy job at the best of times. He or she carries the can for the effectiveness of the financial crime controls within their firm, and there’s the added pressure of having to make judgement calls in a risk-based environment.
Regulation doesn’t make things any easier either. On the one hand there’s the pressure of regulatory change from Europe, whilst at the same time we have a regulator that’s cracking down on anti-money laundering (AML) control failings more and more.
And I’m sorry to be the bearer of bad news, but it looks like things might soon get a bit worse. Here are three reasons why.
1. Solicitors are Feeling the Heat
The Solicitors Regulation Authority (SRA) is keen to see that its members don’t become caught up in money laundering activity, and are compliant with the various regulations and legislation associated with AML compliance. (News release: 8 September, 2014)
So to achieve this aim, it has launched a review of the controls operating within the highest risk firms, as well as declaring that it will provide support to the rest of the profession.
The SRA won’t just be looking at the controls in place to prevent money laundering from taking place. It will also be looking to ensure suspicions of money laundering are reported by its firms to the relevant authorities, and that the controls are in place to make sure such reports are always made. The quote from its CEO Paul Philip, refers to solicitors making sure ”…that they are compliant with the current regulations and legislation”.
This must mean that the legal profession is concerned about the crackdown on AML controls by the FCA and wants to apply the lessons learned. If they’re concerned, then the rest of us should be too.
2. Companies Beware – You Could be on the Hook if you Fail to Stop Financial Criminals
This is particularly concerning, and will only add to the burden carried by MLROs. Plans have been put forward by the Attorney General, and previously by the director of the Serious Fraud Office (SFO), to introduce a corporate offence for failing to prevent economic crime.
Currently, companies can be judged to have committed a criminal offence for having inadequate defences against bribery. But the push now is towards extending this to other financial crime offences, such as fraud and money laundering. If this were to happen, then many more businesses would be brought within the enforcement reach of the SFO. What’s also important here is that the SFO can now use deferred prosecution agreements for corporate offences, which can make the enforcement process quicker, without investigations and subsequent prosecutions.
And that will only mean more pressure for MLROs. Not only will they have more work to do sorting out problems and keeping their firms on the right side of the law, but they’ll also have to manage the extra personal liability that will invariably come with this change.
3. The FCA Helps a Little Bit less
In July, the FCA posted a list of what it considered to be countries that presented a high money laundering risk. But now this list has been withdrawn and the FCA has confirmed that no such list will be published in the future.
Admittedly, this list wasn’t without its problems. The Cayman Islands were particularly concerned to see that they were named on the list and protested vehemently to the FCA to justify its reasons for the inclusion. Shortly after this, the list was withdrawn
This means one less area where MLROs can rely on the regulator for guidance. So, when dealing with clients in overseas territories, firms will need to rely entirely on their own risk assessments, without the benefit of understanding where FCA supervisory teams will be focusing their activity.
Which means more work and more uncertainty.
So the immediate future doesn’t look particularly bright for MLROs who ultimately are carrying the can, not just for their own conduct but that of their team, and indeed the entire firm.
And there’s no way that any MLRO can start to have any comfort unless he or she knows that staff have been properly trained.
Of course, AML training isn’t a new requirement. For years, regulations have required that staff be trained at regular intervals. But making sure that training is relevant and up to date for everyone is one way to make sure that controls are being applied effectively, because people understand them.
If you need help in constructing or updating training programmes for staff, there are plenty of conferences and seminars that will bring you up to date with the latest developments. For newer staff in control functions, some serve as an ideal introduction to fraud, financial crime or AML. Take a look here and you’ll see what I mean.
MLROs, like any other approved person role, need to ensure they’re keeping up with their individual CPD as well. If you have a need for training in a specific area, such as emerging developments in Europe, the increasing threat of cybercrime or developments in market abuse regulations, there’s a good chance you’ll find what you’re looking for here too.
And for those who want to go a bit further and obtain a qualification in AML or financial crime prevention, you can find everything from full diploma programmes to specialist certificates.
So, even if the horizon looks a little bleak, the one thing that can be controlled is the way in which everyone receives the right training at the right time.
At least this is one area, thanks to Industry Events Online, where MLROs can feel well supported.
By Martyn Oughton a Professional Member of the International Compliance Association (ICA). Martyn now writes a regular blog for Industry Events Online focusing on the importance of training in all aspects of compliance. Read Martyn's other publications at Martyn's Writers' Residence website.
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