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This audio file was produced by AI and is based on the regulatory news article above on MLRO.
Being an MLRO involves taking on a range of distinct legal obligations and responsibilities under AML regulations. In practice, however, the role goes far beyond meeting regulatory requirements, and many MRLOs are increasingly involved in the wider economic and business risk agenda.
“Our role is not just about compliance, important though that is” emphasises Jac Berry, MLRO at Forvis Mazars. “It’s also about stewardship and safeguarding the firm and our people.”
“What we’re doing is protecting the UK economy and the victims of economic crime.” adds Nikhil Manek, partner, MLRO at KPMG. 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.”
Widening scope
Most MLROs have seen the extent and breadth of their role increase in recent years, and this has brought challenges and opportunities.
“As regulatory obligations continue to evolve and change, we've got to be able to horizon scan those and keep our knowledge and information up to date,” says Sarah Job, Compliance Director and deputy MLRO at Forvis Mazars. “We also need to align that with a pragmatic sense of how we manage the risks within the business, and collaborate with the business to incorporate all these different aspects.”
“We’re working in a specialist technical area,” adds Jac. “And it’s been getting more complex in recent years, in terms of Companies House reform, the pace of change in the sanctions regime, and dealing with suspicious activity reporting.”
“Many MLROs are taking on wider responsibilities, such as on sanctions, fraud or a broader risk role because they seem a good fit with the role,” observes Nikhil. “So being agile and being able to build capacity – both personally and within the team – to take on new roles and requirements is important.”
The expansion of many MLROs’ remits reflects wider economic, social and regulatory trends. In this context, Bishop Fleming has set up a Risk Committee to oversee the broader risk agenda. “As the MLRO, I chair that committee,” says Simon Morrison, Audit Partner and MLRO at Bishop Fleming.
Although this takes time and commitment, it has its advantages. “It means I get more clarity in terms of the wider risk agenda, and more visibility,” he explains. “Five years ago, the MLRO would probably just be covering the AML piece, while someone else would be dealing with ethics or covering reputational risk.
“It’s good that it’s a less discrete role now,” agrees Jac. “You get more overlay with the rest of the business because risk appetite and client acceptance are so heavily intertwined with our regulatory responsibilities now.”
For Nikhil, MLRO is one of a portfolio of roles he holds. “Having that portfolio helps me,” he says. “You get the benefits of understanding and seeing those broader business impacts and risks that affect the decisions you’re making.”
Greater scrutiny
The current economic and political landscape has led to increasing internal and external interest in, and scrutiny of, the clients and engagements accountancy and other financial services firms are taking on.
High profile political issues, such as sanctions against Russia following its invasion of Ukraine, as well as commitments to the environmental, social and governance (ESG) agenda and the need to manage reputational risk are altering the environment within which firms and their MLROs operate.
“People are increasingly asking not just can we take on this client, but should we take on this client?” explains Nikhil. “So, for some MLROs, the role is extended to understanding issues such as the geopolitical context, as well as how people’s principles and values are influencing their work lives.”
“This is making the job more interesting because there are a lot more things to think about,” says Nikhil. “But that also makes it harder because I've got to consider not just my own firm's perspective, but what other people would think about the decisions we make.”
Holding the line
In this constantly shifting environment, MLROs need a wide range of skills, from technical knowledge to softer human skills.
For Nikhil, being firm, clear and decisive are key to the role. “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.”
“I agree about the immediacy of response required,” adds Jac. “Teams and clients expect answers more quickly; it’s just the way of doing business now.”
Ongoing economic pressures and changes in the market also mean more difficult decisions are potentially being presented to the MLRO. “People might start looking at opportunities that perhaps they wouldn't have looked at before,” suggests Nikhil. “So, staying alert and holding the line is even more important. And you need to do that because of the personal responsibility the role brings and the expectation the regulators have of us.”
Sarah has noticed that when client teams are looking to accept different types of, and/or larger clients, they’re still expecting fast responses. “This can be challenging,” she explains, “especially if you're dealing in a more complex area that requires time for that all-important critical thinking.”
On the plus side, Jac finds client teams are generally engaging earlier. “I think that’s partly because they better understand what's required, what questions need asking and why” she says.
Giving feedback
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 Simon. “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 a good dose of professional scepticism.”
Staying approachable is also important. “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,” says Sarah. “You want everyone to come to the MLRO, whatever their grade or experience, and it not to be a big deal.”
Acknowledging people’s contribution and giving feedback is another key element of the role. “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,” says Jac.
“If, for example, we submit a SAR and get a follow up from the National Crime Agency, we try and relay that message back to people – without breaching confidentiality – to show what we did was useful and had an outcome,” adds Nikhil. “Giving the business feedback is probably the best way of bringing it to life.”
Getting support
Tapping into support networks is critical. “You learn as you go along,” says Simon. “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.
His 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.”
In the last few years, he has seen his support networks grow. This has been true internally, as more people engage in, and appreciate, the risks associated with economic crime. “But being part of external forums has also been very powerful,” he adds.
“Networking with people outside your firm and participating in those wider groups is key, because it’s not until you're in a meeting or a room with other MRLOs that you realise everyone's facing the same challenges.”
Jac also highlights how technology is increasingly providing support. “The quality and ease of technological support has improved in the last couple of years,” she says. “Obviously, you can't rely on it to make the decisions for you. But the quality of information you can get from various sources is making it easier for us to take better informed decisions.”
Stay true
Nikhil’s advice to MLROs who are starting out is to “stay true” to the requirements of the role. “It’s a personal responsibility first,” he emphasises, “and the firm’s responsibility should align with that, but there could be times where maybe it doesn't and then you've got to recognise your personal regulatory responsibility, because there could be direct consequences for you if you don’t.”
“I’ve always felt empowered to make decisions because I've got the backing of the business internally,” he stresses. “But that isn't necessarily true for everybody, and that can weigh on the MLRO’s mind. 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.”
