The FIAU has just published a guidance note titled ‘Common Issues related to the Money Laundering Reporting Officer’ (MLRO). The context of the document is to condense a series of frequently asked questions which define the standards expected of the MLRO; and Subject Persons in the context of their engagement of an MLRO and the parameters under which the MLRO must operate.
This 11-page document covers six areas:
- Independence & Autonomy
Here the FIAU makes it very clear that the MLRO must not be subject to duress, undue influence, or superfluous scrutiny due to the sensitivity and confidentiality of the MLRO’s work.
- Conflicts of Interest
The guidance note sets the context that it is the MLRO that has the authority to refuse the on-boarding of a client, or of terminating a business relationship in the context of AML/CFT risk. Hence, the MLRO cannot hold a client facing role and scrutinise him/herself with respect to acting within the Law.
- Outsourcing, Secondment & Employment
The FIAU provides a strong steer, re-clarifying outsourcing as not being the way permissible in the norm. It also emphasizes that ‘part-time’ MLROs need to ensure that enough resources are dedicated to the cause and the matter is re-assessed from time to time. Exceptions are permissible in very limited situations already outlined in the FIAU IPs.
- Knowledge, Skills & Expertise
MLROs require to have the skills and knowledge on the subject matter apart from having adequate seniority and command. In case of regulatory approval scenarios, whilst the supervisory authority may appoint an MLRO, the FIAU is checking the MLRO’s fitness through its supervisory activity.
- Personal Liability
The FIAU spells out that an MLRO is culpable where there has been a breach in the obligations and the MLRO contributed or caused the breach through wilful actions or gross negligence.
- Record Keeping
The FIAU highlights how essential record-keeping is and that undocumented matters are not acceptable.
The Guidance Note is accessible through the following link: https://fiaumalta.org/wp-content/uploads/2022/04/Common-Issues-related-to-the-Money-Laundering-Reporting-Officer.pdf