The Financial Conduct Authority (FCA) in Britain has expressed concerns over the high turnover of Money Laundering Reporting Officers (MLROs) in certain companies. The FCA reached out to 643 firms that had experienced three or more changes in this role within the past three years. According to a Freedom of Information Act request, the FCA initiated contact with these companies, seeking explanations for the short tenures of individuals in the MLRO position. The FCA is worried that frequent turnover may impede effective supervision, suggesting potential deficiencies in the work environment or insufficient resources allocated to the role.
Fincrime expert Oonagh van den Berg stressed the gravity of the MLRO position, noting its individual accountability and the need for a high standard of entry. She proposed clear criteria, including a minimum number of years of experience and a specific qualification level, before an individual can attain MLRO status. Van den Berg expressed concerns about companies seeking candidates with inadequate experience, citing instances where MLRO roles required five years of anti-money laundering (AML)-related experience, deeming it both a liability and laughable.
According to van den Berg, firms have an obligation to hire individuals with the right talent for MLRO roles, considering their risk environment and respecting the independence of the position. She raised concerns about some firms' questionable adherence to regulatory requirements and the necessary independence and experience expected from MLROs. Without constructive action, van den Berg warned of continued exposure of the financial services industry to unnecessary financial crime risks.
In response to the FCA's outreach, van den Berg suggested that the regulatory body could send a stronger message to the industry by taking more than two enforcement actions against officers within the last seven years. Overall, the concerns raised highlight the importance of stringent criteria for individuals in critical roles like MLROs in financial institutions, emphasizing the need for industry-wide awareness and proactive measures.
By fLEXI tEAM