Anti-Money Laundering – how prepared is your business?

The need to adhere to Anti-money laundering (AML) regulation is a necessity for all regulated sector businesses.

For those businesses who choose to tackle their AML responsibilities in house this means assigning the responsibility of Money Laundering Reporting Officer (MLRO) or Nominated Officer (NO).

Since the responsibility for ensuring regulatory compliance is huge the role of MLRO is often fulfilled by the owner of the business, however, increasingly the time burden of ensuring compliance across a business is so great that this role is often delegated to a member of staff. Below we examine the responsibilities of an employer handing over the MLRO reigns and the consequences of getting this wrong.

Your HR responsibilities as an employer

Training is key.

Just assigning the responsibility of MLRO/NO to an employee and hoping for the best is not acceptable.  As an employer you are required by law to train your staff, MLRO/NO included, in Anti-Money Laundering. This does not mean sitting them down with a book and telling them to study. You need to be sure that your MLRO/NO understands what is required of them so that they can protect your business appropriately. There are significant personal liabilities attached to being the MLRO/NO however if a person employed as an MLRO/NO fails in their responsibilities and it is found that they were not adequately trained the responsibility falls to the business owner.  This can mean personal fines and/or a custodial sentence.

Update the person’s job description (or make sure a new starter’s job description is accurate)

The Regulator requires that the MLRO/NO has an up to date and accurate job description which makes clear their responsibilities. From an employer’s point of view this is also good practice as it ensures that your employee knows what you are expecting from them and enables you to take appropriate action if they do not perform to the standards you require.

Training is key (that’s why I am repeating it)

AML training needs to be kept up to date.  The legislation surrounding AML is ever changing, as are the ways in which money launderers will try to ‘use’ your business in their criminal endeavours so making sure that your staff, especially your MLRO/NO, are kept constantly up to date is essential.  Regulators require a training update for every member of customer facing staff every 2 years as a minimum but we recommend an annual update to make sure that your team keep AML at the forefront of their minds and to assist your MLRO/NO in making the processes and procedures within your company a success.

Make sure the job is not too big

As a responsible employer you are duty bound to make sure that your employees have enough work to be gainfully employed but not too much that they are overloaded and stressed. Where your MLRO/NO is concerned you need to be extra vigilant to make sure that they are not overstretched.  This doesn’t mean wrapping them in cotton wool but just being mindful that they are responsible for protecting your business from would be criminals and they need to have the time and resources to be able to do this effectively.

 Make sure your records are up to date

You have given the responsibility for Anti-Money Laundering to an employee, this does not mean that they should be left to their own devices.  As I have said you have given them the responsibility to protect you and your business, make sure they are doing just that.  Regularly test the systems and ask for updates on the number, type and progress of Suspicious Activity Reports, both internal and those reported to the National Crime Agency.  You do not want to find out when it is too late that the systems your MLRO/NO has put in place are inadequate or have not been properly monitored.

Understand the role of the MLRO

Make sure that you know exactly what your Regulator expects of your MLRO/NO, after all how can you monitor their performance and tailor their training if you don’t know what it is they should be doing for you.

Your responsibilities as an employee

Training is key (you will realise by now that this is very important).

Your employer has a responsibility to ensure that you are adequately trained to handle your role as MLRO/NO.

It is your responsibility to make your employer aware if you do not feel adequately able to perform in this capacity.  It is also your responsibility to use the training you have been provided with to fulfil your role.  If you fail in your role as MLRO and your employer proves that you were adequately trained and therefore acted negligently any personal liability for the misdemeanour will fall to you as happened in the case of  Steven Smith who was personally fined £17,900 and prohibited from performing MLRO or compliance oversight functions at regulated firms when it was found that he:

• failed to put appropriate Anti-Money Laundering monitoring arrangements in place;
• failed to identify serious weaknesses in procedures;
• failed to identify a training need among the staff;
• informed the company’s board and senior management team that Anti-Money Laundering procedures were working when they were not;
• failed to report the company’s internal auditors concerns as well as withholding details of internal testing;
• and failing to appropriately address the need for more resources in the MLRO function including taking adequate steps to recruit more staff when needed.

His employer, Sonali Bank (UK) Limited,ere also fined £3,250,600 and had a restriction imposed preventing it from accepting deposits from new customers for 168 days causing reputational damage and loss of income.

Making sure you can adequately cope with the role.

It is your responsibility as MLRO/NO to make your employer aware if you are drowning under the weight of Anti-Money Laundering compliance.  If your workload is too large for you to deal with effectively you are putting the company at risk of procedural failure and the consequences could be huge.  No matter what training you are given, it would always be recommend that you carrying out your own reading and research on what is expected of an MLRO in your particular regulated sector for you own peace of mind as well as to make sure that you are doing a good job

Make sure your door is always open for your team.

This may or may not be a metaphorical door, however the principle is the same. Make sure your team know that they can come and talk through any suspicions or concerns they may have over clients or transactions.  The notion that they will be thought of as silly is one of the key reasons staff members become reticent to report suspicions to their MLRO. This can lead to dangerous transactions occurring in the business despite processes and procedures being in place. Coupled with adequate and regular training, an open and honest culture in the company will prevent this from happening.

For HR Professionals:

Following these guidelines, whether you are an employer or an employee will stand you in good stead.  Working together within your company will ensure that your AML systems are effective and that both employer and employee feel secure and confident that your business has robust enough procedures to meet the exacting demands of your Regulator.

Thank you to Rebecca Partridge, Operations Manager for TL Compliance for

TL Compliance

writing this guest blog.

If you are interested in the work that she does and how TL Compliance might help you, please give her a call on 01904 201010.

You can visit their website:  www.tlcompliance.co.uk