The Unsung Hero: Money Laundering Reporting Officer (MLRO)

Anti money laundering concept (AML) AUTHOR

Ryan Kaye

- July 19th, 2023

Did you know? Roughly £100 billion of illicit funds are laundered every year in the United Kingdom. This staggering statistic highlights the critical need for a Money Laundering Reporting Officer (MLRO) and their essential role in preventing financial crime.

In our blog post, we’re going to explore in depth a critical role within the financial industry that often goes unobserved: the Money Laundering Reporting Officer (MLRO) or Compliance Officer.

Specifically, we’ll take a look at their importance within an Electronic Money Institution (EMI), Small Payments Institution (SPI), Authorised Payment Institution (API), and Money Transfer Operation (MTO). So, let’s dive headfirst into the topic and learn why an MLRO is an unrecognised champion in the fight against financial crime.

The Increasing Significance of an MLRO

When financial organisations attempt to sustain integrity and trust, ensuring regulatory compliance has become a primary concern. And an EMI, API, SPI, and MTO institution is no different. Luckily, this is where an MLRO comes into play. They must make sure these establishments adhere to anti-money laundering (AML) and counter-terrorism financing (CTF) regulations.

Essentially, an MLRO is the protector of financial integrity. Their job entails executing forceful procedures, strategies, and systems to stop money laundering and other unlawful activities. An MLRO is instrumental in protecting the financial system by actively performing comprehensive risk assessments, censoring transactions, and meticulously reporting untrustworthy activities.

MLRO at desk
MLRO at desk

How an MLRO Powers Compliance in an SPI, EMI, API, and MTO

An MLRO has a critical function within an SPI, EMI, API, and MTO, facing unusual challenges because of the nature of its operations. These organisations frequently cope with extraordinary volumes of transactions concerning numerous currencies and jurisdictions. An MLRO must navigate complicated regulatory landscapes and stay informed on developing AML and CTF practices.

An MLRO acts as a liaison between the regulatory authorities and the institution. They guarantee that an SPI, API, MTO, and EMI submit punctual reports, undergo frequent audits, and sustain the relevant registrations and licences. Through their thorough actions, an MLRO proactively manages the risk of non-compliance, shielding the organisation from extreme financial liabilities, reputational impairment, and the possible loss of operating licenses.

The Essential Experience of an Accomplished MLRO

A head of compliance and MLRO have integral positions at financial services firms. Countless organisations necessitate an FCA-approved senior management function (SMF) holder. These roles demand essential abilities and experience to be successful, supporting the level of their skills and knowledge with the organisation’s size and risk profile.

Want to be a high-performing MLRO? You must have a brilliant blend of expertise and skills. You need an in-depth knowledge of Counter-Terrorism Financing (CTF) and Anti-Money Laundering (AML) regulations, not to mention an understanding of the specific industry you operate it.

What’s more, an MLRO must have robust analytical skills, a proficient eye for detail, plus the scope to identify suspicious transaction patterns. Another crucial skill for an MLRO is efficient communication skills, as you’ll need to correspond with a range of stakeholders, such as workers, regulatory bodies, and executive-level officials. Ultimately, an MLRO functions as an instructor, raising awareness among employees about how paramount it is to comply with and deliver training on CTF and AML practices.

Money Laundering Reporting Officer at desk
Money Laundering Reporting Officer at desk

Training: Equipping Yourself for Success

To boost your chances of being successful, you should have attained up-to-date, applicable training that aligns with the company’s business industry. Avoid short introductory courses for a head of compliance and MLRO position.

Even though we don’t endorse specific formats or providers, we do advocate courses with assessments to demonstrate your comprehensive knowledge. If you completed training a few years ago, you’ll probably need to supplement it with continuous professional development.

Experience: Embracing Diversity

Employers these days prefer diverse candidate experience. Previously, successful applicants ranged from legal, compliance, consulting, and accounting backgrounds. A former MLRO or head of compliance role isn’t critical but having junior compliance roles or similar accepted positions helps. Front-line experience may lack needed skills. CEOs, owners or smaller companies may hold these functions. However, relevant training and experience are expected for compliance.

Assistance from Third Parties: Enhancing In-House Arrangements

Numerous companies may require compliance support from external advisors such as consultants and lawyers, to help with applications and continuous compliance functions. While not essential, this can enhance in-house arrangements. That said, if external support is the sole compliance resource, your application may be rejected. If you’re seeking an MLRO or compliance role, you must possess ample knowledge and expertise to seek advice when needed, make appropriate decisions, and implement received advice.

Capacity: Commitment and Location

If you’re applying for a compliance or MLRO role, you must dedicate the right amount of time to the role. It’s common to see full-time roles advertised, while smaller companies typically advertise part-time positions if commitment is sufficient. Generally, companies prefer applicants to work from a UK-based location and, for improved efficiency, they prioritise senior leaders or company directors.

MLRO Compensation Insights

As a specialist Banking and Financial Services recruiter, our past salary data suggests the average salary now falls between £105,000 to £130,000 per year, inclusive of benefits (this data reflects real figures from executed client mandates).

However, if the individual also undertakes the role of a Compliance Officer (SMF16), then the potential salary could increase significantly, varying from £125,000 up to £200,000. The actual salary within this range depends on the firm’s size, business verticals, geography, strategic goals, and current challenges.

The Prognosis for an MLRO in a Financial Institution 

In the ever-evolving landscape of financial technology, the importance of an MLRO will become more pivotal and fundamental. Digital transactions, open banking and cryptocurrencies are growing exponentially, presenting new opportunities and challenges for an MLRO. And therefore, they need to adjust to emerging technologies, like machine learning and AI, to boost their detection capabilities and sustain an edge in tackling intricate financial crimes.

On top of that, an MLRO has the potential to actively contribute towards shaping compliance strategies and propelling the advancement of regulatory frameworks. Their expertise and wisdom can enable intuitions to remain compliant while nurturing innovation and client-focused solutions.

The Evolving Function of an MLRO in Protecting Financial Integrity and Facilitating Trust

An Money Laundering Reporting Officer is a defender of financial integrity. They’re the silent guardians that often go unnoticed. An MLRO works diligently within an API, EMI, SPI, and MTO to stop money laundering and other prohibited actions. Thanks to their meticulousness, excellent communication prowess, and experience, they’re imperative in sustaining regulatory compliance.

Amid the continuous evolution of the financial industry, a Money Laundering Reporting Officer must constantly adapt and welcome high-tech advancements to tackle materialising financial offences successfully. Through these efforts, an MLRO will continue protecting the economic infrastructure and garner trust and confidence among clients and governing bodies alike.

The Takeaway

So, when you consider the financial industry’s champions, don’t forget the MLRO operating silently in the background to ensure the cleanliness and security of our economic systems. At Market Talent, we know how vital it is to recruit a competent MLRO who can dexterously manage the difficulties of compliance and positively impact the success of financial institutions.

Are you an MLRO seeking new opportunities? You can check out MLRO and AML roles here. Want to find top talent in the financial sector? Don’t hesitate to give us a call. Visit our website to explore our services and connect with us now. Let’s join forces to forge a resilient and compliant future for the financial sector.