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ML 7.1 The money laundering reporting officer

MLRO: approval by the FSA and role

ML 7.1.1G

A relevant firm has to appoint an individual as its MLRO (see ML 7.1.5 R). Under section 59 of the Act, the function of acting in the capacity of the MLRO has been specified as a controlled function (see SUP 10.1.13 R). As a consequence, any individual invited to perform that function must be individually approved by the FSA, on the application of the relevant firm, before performing the function. The job of the MLRO is to act as the focal point within the relevant firm for the oversight of all activity relating to anti-money laundering. He needs to be senior, to be free to act on his own authority and to be informed of any relevant knowledge or suspicion in the relevant firm. In turn he has to pass on issues to NCIS as he thinks appropriate. He can be expected to liaise with NCIS on any question whether to proceed with a transaction in the circumstances.

Firms within a group

ML 7.1.2G

If a relevant firm is part of a group, it may choose to appoint as its MLRO an individual who performs that function for another relevant firm within the group.

Delegation by the MLRO to others

ML 7.1.3G

If a relevant firm that is a member of a group chooses the approach in ML 7.1.2 G, it may wish to permit the MLRO to delegate anti-money laundering duties to other suitably qualified individuals within the relevant firm . Similarly some relevant firms, particularly those with a number of branches or offices in different locations, may wish to permit the MLRO to delegate such duties within the relevant firm. Where anti-money laundering tasks are delegated by a relevant firm'sMLRO, the FSA will expect the MLRO to take ultimate managerial responsibility for ensuring that the duties imposed on the MLRO by this sourcebook are complied with. The responsibilities to be discharged by the MLRO are set out in ML 7.1.11 R.

MLRO as "nominated officer" under Money Laundering Regulations

ML 7.1.4G

If convenient, a relevant firm may decide that the same person can carry out the responsibilities of the MLRO and of the "nominated officer" under the Money Laundering Regulations. "Nominated officer", under those Regulations, has the meaning given by Regulation 7.1

Duty to appoint MLRO

ML 7.1.5R

A relevant firm must appoint an individual as its MLRO and operate arrangements that are designed to ensure that it and the MLRO comply with the relevant obligations of this chapter.

ML 7.1.6R

When a relevant firm appoints an individual to be its MLRO, it must choose someone who is employed within the relevant firm, or within another relevant firm in the same group, whether as part of its governing body, management or staff.

Qualifications and resources of MLRO

ML 7.1.7R

So that he can carry out his controlled function effectively, a relevant firm must ensure that its MLRO:

  1. (1)

    has a sufficient level of seniority within the relevant firm; and

  2. (2)

    has sufficient resources, including sufficient time and (if necessary) support staff.

ML 7.1.8G

"Sufficient resources" should include arrangements to apply in any temporary absence of the MLRO, who should take reasonable steps to ensure the adequacy of such arrangements. An individual who performs the role of MLRO for a period of less than 12 weeks in a consecutive 12 month period does not need approval by the FSA (see SUP 10.5.5 R (periods of less than 12 weeks)).

ML 7.1.9R

A relevant firm must ensure that its MLRO is able to:

  1. (1)

    monitor the day-to-day operation of its anti-money laundering policies; and

  2. (2)

    respond promptly to any reasonable request for information made by the FSA.

ML 7.1.10E
  1. (1)

    A relevant firm should ensure that its MLRO is based in the United Kingdom.

  2. (2)

    Contravention of (1) may be relied on as tending to establish contravention of ML 7.1.9 R.

Responsibilities of the MLRO

ML 7.1.11R

A relevant firm must make its MLRO responsible for:

  1. (1)

    receiving internal reports under ML 4.1;

  2. (2)

    taking reasonable steps to access any relevant know your business information;

  3. (3)

    making external reports to NCIS under ML 4.3 (External reporting);1

  4. (4)

    obtaining and using national and international findings under ML 5;

  5. (5)

    taking reasonable steps to establish and maintain adequate arrangements for awareness and training (whether by himself or someone else) under ML 6; and

  6. (6)

    making annual reports to the relevant firm's senior management under ML 7.2.

ML 7.1.12G

APER 4.7.2 E and APER 4.7.9 E make provisions about the conduct of the MLRO, to help determine whether the MLRO's conduct complies with Statement of Principle 7 concerning the conduct expected of the MLRO as an approved person.

Duty to appoint MLRO when position vacant

ML 7.1.13R

If the position of MLRO falls vacant, the relevant firm must appoint another individual as its MLRO.

ML 7.1.14G

The obligation on a relevant firm to appoint an MLRO is in ML 2.1.1 R. That provision is limited to relevant firms and does not apply:

  1. (1)

    if the relevant firm is a sole trader with no employees; or

  2. (2)

    if the relevant firm is an incoming firm which is only providing cross border services (as opposed to operating through an established branch) in the United Kingdom.