It is annual report time for Money Laundering Reporting Officers

MLRO: Annual Report responsibility

With the end of the year approaching, all Money Laundering Reporting Officer’s (MLRO’s) should be well under way in their review of their organisations anti-money laundering procedures in readiness for presenting their annual report.

The annual report must be presented to senior management and does not take a specific form. The level of detail required to comply with the statutory legislation will depend upon the size and type of work undertaken and this degree of flexibility for the MLRO can lead some to believe that a small organisation need not comply at all.

This is an incorrect assumption and would leave the MLRO exposed to personal liability should an anti-money laundering (AML) problem arise.

Undertaking this important annual review and completing the report ensures that the MLRO can evidence that his/her duties have been fulfilled. It is a good opportunity to review the current work practices and plan for the future, particularity if there are changes in legislation or training requirements needed. It is also the time to check that all staff have been appropriately inducted, to consider the audit of work that has taken place over the course of the year and whether any specific additional support is required.

The final report should comment on the effectiveness of the organisation’s AML systems and controls as well as making any recommendations for improvement. It is likely that in order to achieve this there would need to be a review of the risks facing the business and its priorities, as well as highlighting the resources available to address those issues. A review should therefore go beyond considering everyday work practice. It is a business review that also analyses the trends arising from enquiries and audits throughout the year.

Whilst there is no specific form, a report should include the following in order to show the MLRO’s understanding of their statutory role:-

  • The AML governance structure and functions
  • A report on the operation of systems and controls – to include training and monitoring
  • A summary of business issues – to include record keeping, risks and Client Due Diligence processes
  • Conclusions and recommendations

Be ahead of an audit and complete your annual report. Failing to do so exposes your organisation to a fine and risks a potential personal liability for the MLRO if procedures are not in place to protect an organisation.

If you are an MLRO and need guidance on AML governance structure and reporting responsibilities – then please feel free to get in contact with me, either by commenting below or email me. I’d be pleased to help.

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About Sarah Canning

Head of the Litigation Department at Franklins which incorporates all aspects of Dispute Resolution Contractual, Property & Partnership/Director/Shareholder disputes. In her "spare" time Sarah is proud to be one of the Northamptonshire Ambassadors; an external member of the University of Northampton's Audit Committee; a board member of Northamptonshire Enterprise Partnership (NEP); and the Chair of the IoD Northamptonshire Branch. Follow her on Twitter here: @SarahJCanning
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