Understanding the role of the Money Laundering Reporting Officer

The Malta Financial Services Authority (“MFSA”) has issued a Guidance Paper on the 21st July 2020, providing information on the role and duties of the Money Laundering Reporting Officer (“MLRO”).

The MFSA explains that all subject persons, including those operating within the regulated financial services sector are obliged, under the Prevention of Money Laundering and Funding of Terrorism Regulations (“PMLFTR”), to appoint an MLRO.

The appointed MLRO must understand the importance of the role assigned by taking into consideration the responsibilities attached to this position, as well as the consequences that may result from failing to comply with his duties in an efficient and accountable manner.

It is important that the MLRO has the necessary experience and knowledge in relation to Anti-Money Laundering (“AML”) matters while also having a thorough understanding of the subject person’s operations. Additionally, the MLRO must be appointed in a manner which is free from any conflicts of interest in order to take independent, effective and efficient decisions. This will enable the MLRO to supervise the subject person in an adequate manner, identifying any possible risk exposures and thereafter advise senior management on how to manage such risks. Furthermore, the MLRO is the officer responsible for submitting a Suspicious Transaction Report (“STR”) to the Financial Intelligence Analysis Unit (“FIAU”) where necessary, after taking into account the business of the subject person. MLROs also have the important role of creating policies and procedures, including record keeping and internal reporting policies while also ensuring that sufficient and satisfactory due diligence is being undertaken on the subject person’s customers. In attending to his functions, the MLRO is to have access to any data of the subject person he deems necessary.

Although an MLRO does not necessarily need to be legally trained, knowledge in this field is useful since he might be required to disclose sensitive information to the FIAU having legal implications. Alternatively, an MLRO might be given access to good legal advice about this aspect of their role. Finally, it is important to note that senior management should be committed in providing their MLRO with ongoing professional support for the performance of the required duties.

Feel free to contact us if you require any further information in relation to the role of the MLRO.