Note to the MLRO

The position of the MLRO is fundamental as it holds an important AML functionality and the respective responsibilities. The MLRO also acts as the main point of contact with the regulators. 

This position can be subject to civil and criminal actions which can result in hefty fines and/or prison sentences if it is demonstrated that the MLRO did not fulfil the assigned AML role as legally bound to, thus leaving substantial lacunas that were not duly assessed and adequately addressed. Alongside the potential incineration and/or fine, such criminal sentence would result in adverse media on the individual as well as on the institution. Thus such bad publicity would have serious personal consequences for the person holding the position of MLRO.   

When accepting this role it is expected that the necessary resources are employed to mitigate any personal risk by allocating technological and human resources at the availability of the MLRO.   

Given that more regulations are being enforced and more digitisation is being implemented, the expectations to comply with higher standards is inevitable. Consequently, the obligations of the MLRO as specified in the legislation cover  all  the  following  areas.  

Auditing and inspections. 

• Providing real-time audit trail on all processing AML activities. 

• Ensuring the collection of evidence of auditing when inspections are carried out. 

• Establish that the correct risk based approach to assessment takes place and that all vulnerabilities are duly identified and recorded.

• That the AML personnel are collecting and verifying the data correctly.

• That the different risks posed by the clients reflect the risk appetite of the company as approved by management.

Ensuring the firm is compliant with anti-money laundering controls as prescribed by  law by ensuring that the following measures are adequately implemented.  

• Individual risk assessments on all clients/customers.

• PEP/sanction scans when engaging and during ODD

• Data  collection and verifications are embedded into predefined workflows or digitalized to minimise the risk of manual handling.

Dealing with information, knowledge or suspicion of money laundering 

• The MLRO shall ensure that the system of internal reporting is working. 

• The MLRO is to be known by everyone in the institution and can be reached by all employees. 

• The MLRO shall train the employees to report any suspicion of money laundering at  their earliest convenience providing the essential information why and what activity or transaction is considered as suspicious. 

Disclose  matters  to  law  enforcement 

• The MLRO is bound to inform the regulator within the shortest time possible as indicated in the law or  by  the  regulator.

• The MLRO shall forward all information and documentation to the Regulator for further assessments and investigation. This should be carried out with confidentiality. 

• The MLRO shall store the evidence provided to the Regulator in a place that is only accessible by the MLRO and/or Designated employee/s. 

• No one shall be knowledgeable of the suspicious transaction reports or suspicious activity reports that the MLRO forwards to the Regulator.

Disrupting  the  traditional  approach

The NewBanking Identity platform is not based on the traditional approach where a patchwork of different systems and data sources makes the backbone of a firm’s AML controls. 

We have found that involving the clients more and automating data collection through system integrations have resulted in substantial savings on internal time spent, increased  client  satisfaction  and  improved  data  quality  and  audibility. 

Let us inspire you and tell how we can lower the risk of being the MLRO!   

All the best,

Christian Visti

Co-founder & CEO.