The Money Laundering Reporting Officer

It is highly important to point out that according to the Prevention of Money Laundering and Funding of Terrorism Regulations (hereinafter referred to as ‘PMLFTR’), all Subject Persons are required to appoint an MLRO.

Any one holding the office of an MLRO must make detailed decisions as to whether a Subject Person is being abused to launder the proceeds of any criminal activity or to otherwise provide financial support to terrorists and shall inform the authorities as soon as possible.

The MLRO shall analyse reports and determine whether there are grounds to submit a Suspicious Transaction Report to the competent authority – Financial Intelligence Analysis Unit. Moreover, the relevant officer may conduct oversight over all the related activities.

An MLRO shall have necessary experience and adequate knowledge of Anti-Money Laundering and the Combating of Financing of Terrorism (AML/CFT) matters and shall also be of sufficient seniority and free from any conflict of interests. One may add that for an individual to be appointed as an MLRO, said person shall first obtain approval from the Malta Financial Services Authority (MFSA).

In practice, MLROs are very much active and involved with a Subject Person’s communications with the FIAU. They also have a pivotal role to play in designing relevant AML/CFT policies and procedures. In addition, should also ensure that its systems are sufficiently robust to prevent any previously identified instances of proceeds of crime or funding of terrorism.

Subject Persons are to ensure that their MLRO has sufficient time to carry out his duties and that said officer is provided with all the necessary human and technological resources to carry out these duties.

While there are currently no regulatory requirements for who should be appointed as MLRO, it goes without saying that dedication, honesty and integrity are fundamental traits that an MLRO shall possess.

Any decision taken by the MLRO shall be detailed and informed. Hence, the MLRO is required to have all the access needed to all the information required by said officer. In addition, the MLRO must have a sound understanding of the day-to-day operations of the Subject Person. Also, all aspects of financial crime that could ultimately result in ML must be included in the knowledge bank of an MLRO, including deep understanding of corruption and bribery.

An MLRO may be subject to an administrative penalty as high as €250,000 if found guilty of AML/CFT breaches.

It shall be highlighted that an MLRO might be required to disclose sensitive information to the FIAU. Hence, knowing what information must be revealed, and when, is very important.

As a matter of conclusion, one may have a look at the Guidance Paper issued by the MFSA for a better and deeper evaluation on the role of the MLRO.

About the Author

This article has been authored by Bjorn Camilleri, CSB Group Legal Trainee. For any additional information or support required please contact us on [email protected].