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The MLRO in practice: uncovering economic crime

Author: ICAEW

Published: 01 Sep 2021

Being a money laundering reporting officer (MLRO) is about much more than meeting regulatory requirements. We talk to some experienced MLROs and their deputies about what it takes to succeed in the role, how they make a difference, and being brave.

MLROs take on specific, and also personal, responsibilities under the anti-money laundering (AML) regulatory regime. Firms and the MLROs themselves are increasingly recognising the breadth of the responsibilities and the purpose of the role, which is to identify and supply information that protects vulnerable people and helps uncover economic crime.

“You can be quite apprehensive at first,” acknowledges Simon Morrison, Audit Partner and MLRO at Bishop Fleming. “It’s one of the roles in practice where you take on obligations, risks and responsibilities as an individual – outside of everything else you do in your day job.”

Like many MLROs, particularly in small and medium-sized firms, he was allocated the job as a new partner. “It gets thrust upon you as a bit of an opportunity,” he says. “But all of a sudden you have to learn this new world, and you get this responsibility and the personal risk that goes with it.”

Other MLROs come to the role with more of a background in AML. Nikhil Manek, MLRO and overall lead for financial crime at KPMG, was initially deputy MLRO to a client facing partner. “I was really his eyes and ears as deputy,” he explains. “I looked on it as an apprenticeship and when he left, I successfully applied for the role. I already had a clear insight into what the MLRO role was, so for me it was a nice transition. But I think going straight into the role would have been very challenging.”

Sarah Job, compliance director and deputy MLRO at Mazars UK, recognises the “eyes and ears” description. For her, being a deputy has been an opportunity to learn and develop her expertise. “As a deputy, I clearly don’t have that personal responsibility,” she stresses. “But I support my MLRO, who also has client-facing responsibilities. We talk through the issues and decide the best way to approach situations; I really value that and know that she does as well.”

A specialist area

“This is very much not about just ticking boxes,” explains Job’s colleague Jac Berry, Head of Quality and Risk, and MLRO at Mazars UK. She took on the role when the firm was looking to increase its AML technical expertise.

“It’s about stewardship and safeguarding the firm and our people,” she says. “The technical parts of the role are really interesting, and they’ve increased over recent years. So I find it both interesting and challenging.”

“I was initially surprised by how technical the role is,” adds Morrison. “The legislation and terminology can be complicated, and you need a good understanding of the legal side and of corporate structures,” he emphasises. “Over the first few years, and even now, I’m always learning more.”

“We need to remember it’s a specialist area,” says Berry. “We might not fully appreciate the complexities when we first come into it. But we all try to keep ourselves up-to-date, and also make sure other people understand the importance of it. If we can help our teams understand that it is real people who can be damaged by some of the activities that are linked to AML breaches, then that helps them take it seriously.”

“It’s also about how you get that message out there to the accountancy sector in general,” adds Morrison. “Those in the AML field appreciate that.” But more broadly, he finds there are still people in the sector who see it as just a compliance exercise.

“It’s really about getting people to believe in a cause,” says Manek. “What we’re doing is protecting the UK economy and the victims of economic crime. That’s really our role – and if you can help get to the hearts and minds of people, that’s ultimately how a firm can protect itself from money laundering and crime.”

As an MLRO, one of the things he has learned is that economic crime really does take place. “Accountants do get prospective clients that present traits that mean they are likely to be involved in criminal activities; it’s not just one of those theoretical risks – it’s an actual risk that we all face, so we have to be on our guard at all times.”

He believes the increased focus on the environmental, social and governance (ESG) agenda, particularly in the last 18 months of the pandemic, is already helping to change approaches to AML compliance. “People are starting to focus more about how firms and accountants are being perceived, and why they are working with particular clients. So buying into hearts and minds is a big part of this.”

Skills for the job

To do their jobs effectively, MLROs need a wide range of skills, from technical knowledge to softer human skills. For Manek, the key skill is the ability to be firm and not give false hope and room for manoeuvre. “So if someone comes to me and says: ‘Should we take this on?’ I shouldn’t say: ‘I’m not really sure’.”

“People in the business want a quick answer, but they also want a clear answer: they want no room for doubt,” he says. “They want your specialist input. So, the ability to provide a clear answer as soon as practicable is a critical success factor of the role.”

Being able to stand back and understand the bigger picture is another key skill. “Sometimes you get presented with something, where a colleague will think it’s OK to go ahead because they’ve got all the paperwork and checks,” says Morrison. “But we really need to stand back and say: ‘Yes, but it doesn’t stack up; it doesn’t look right’. And that comes with experience and probably a good dose of professional scepticism.”

“For me, it’s the ability to assimilate information coming from lots of different sources,” says Berry. “And it’s also about understanding the substance as well as the rules. It’s staying calm too and not being rushed – these decisions are important.”

Approachability is also important. “You can’t just be sitting in your ivory tower, saying you can’t do this or that,” says Job. “You’ve got to have the people skills to be able to engage with the business and to deliver the messages in a way that doesn’t jar or cause friction.”

“You want everyone to come to the MLRO, whatever their grade or experience, and it not to be a big deal,” she adds. “So we’ve been hosting monthly drop-in sessions, so anyone can ask questions, not just about money laundering but about other compliance issues too. It’s a way of getting ourselves in front of people.”

Acknowledgement is also important, stresses Berry. “If you have a junior member staff and they’ve flagged something, then it’s really important to ensure they feel valued and supported and know they’ve done the right thing.”

Networking support

So far, there is no MLRO qualification for the accountancy sector. There is also a lack of MLRO-specific guidance more generally. Therefore it is important that the MLROs and their firms are able to demonstrate they have the right experience and training. 

All the MLROs we spoke to agree that a simple and clear document explaining what the role is, the responsibilities and the basic legislative framework would be very helpful, perhaps along the lines of a training pack for new starters. This is something that ICAEW hopes to introduce later this year.

Morrison points out that the guidance already out there can sometimes be difficult to access for a newcomer. “If you know where to look, there is guidance,” he says. “But in the first few years I didn’t know where to look. You learn as you go along, but it can be a very lonely place when you first start being an MLRO.”

To address this, he recommends making the effort to get to know other MLROs and professionals in the field. “That’s when you start to open your eyes and realise there’s a lot of help and guidance available. You start to engage with other people facing the same issues and challenges as you.”

Be brave

Morrison’s key piece of advice to new MLROs is “don’t be afraid to put your head above the parapet outside the firm and talk to other people. Seek out other MLROs, make some friends, and get involved, particularly if you’re working in a smaller firm.”

From his perspective, Manek suggests new MLROs be prepared to “see more grey”. “Things aren’t always black and white,” he emphasises, “especially in our world and for the business. Being an MLRO can be difficult but you are the appointed expert and it’s up to you to guide the business to make the correct decisions.”

“The questions we deal with are not binary,” agrees Berry. “If they were easy, no one would need to consult us, so use your judgement, be calm and be a bit brave. It’s not a popularity contest. Have confidence in yourself in giving your view and making those sometimes difficult calls.”


More information about the AML responsibilities including the requirements of ICAEW AML supervised firm and resources to support your firm is available here

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