Did you know that the United Nations estimates that between $800 billion (2%) and $2 trillion (5%) of the world’s GDP is laundered annually?
Money laundering is on the rise. With the unyielding domination of the Internet, money laundering practices are too frequent, mostly as a result of the inability to authenticate parties and the lack of audit trials.
It is safe to say that the role of a Money Laundering Reporting Officer in a company is extremely important. Here’s why:
What is an MLRO?
The MLRO is an abbreviation of a personal role held by a person, referred to as a Money Laundering Reporting Officer. Under the Prevention of Money Laundering and Funding of Terrorism Regulations (PMLFTR), all persons including those within the regulated financial services sector, are required to appoint a Money Laundering Reporting Officer (MLRO).
An MLRO plays a key role in providing financial institutions with security and integrity. By striving to prevent money laundering practices, an MLRO essentially wards off illegal activity, benefiting the economy and societal structures alike. What is the role of an MLRO?
Implementing issued regulations
The Prevention of Money Laundering Act (Chap. 373) lays out the guidelines and regulations for the prevention of money laundering in Malta and the associated activities that may be considered as going against the relevant laws. An MLRO ensures that this Legal Act is thoroughly adhered to and that any procedures that infringe upon it are reported in a specific, timely and effective manner.
Issue reports when necessary
It is perhaps the core duty of an MLRO to determine whether his or her suspicion of an infringement is deemed sufficient to lead to reporting of money laundering. The work of an effective MLRO is diligent. Thus, if any suspicion in a transaction is to arise, it is encouraged that reports are made to the Financial Intelligence Analysis Unit to avoid risks.
Encourage an anti-money laundering culture
Together with the management team, an MLRO is to promote and even enforce an anti-money laundering and counter-terrorist culture within a company. By ensuring that as many individuals in a firm are familiar with The Prevention of Money Laundering Act, this is achieved. Internal procedures and training programs are to be carried out to maximise the level of awareness of underlying money laundering risks.
Review internal activity
To contribute to effective risk management within a company, an MLRO often has to monitor internal activities and procedures to ensure that all business activities are risk-free. Monitoring of internal policies, professional relationships, products, services and even of customers is considered appropriate. By establishing a risk-based monitoring process, an MLRO ensures that a firm, no matter its nature, is money laundering free.
Assert total autonomy in decision making
It is absolutely instrumental that an MLRO remains independent and follows his or her own findings and conclusions without any external interference. The decision to file a report to the FIAU is to be made by the MLRO alone. This helps secure that money-laundering suspicions are completely genuine and risk-free.
Remain aware of updated procedures
Money laundering prevention procedures are the backbone of secure and risk-free financial institutions. It is an MLRO’s duty to keep up to date with new regulatory and best-practice updates, notices and advisory measures concerned with established anti-money laundering efforts. The staff are also to be made aware of and trained about any new proceedings that counter money laundering activities.
How We Can Help
The Firstbridge team is committed to guiding you towards proper risk management and lawful procedures for the benefit of your business and its reputation.
Contact Firstbridge to set up a consultation at [email protected]