The Finance Team Behind Your SMF16 and SMF17 Holder
A compliance officer or MLRO is only as effective as the information they work with. Much of that comes from finance: the regulatory returns they rely on, the capital and client money figures they oversee, and the transaction data that shows financial crime risk. Firms often recruit the compliance function without thinking about the finance team beside it. This post explains where the two meet, what a supporting finance team needs, and why recruiting them together produces better results.
Where Finance and Compliance Meet
| Area | What finance provides | Why the SMF16 or SMF17 needs it |
|---|---|---|
| Regulatory returns | Data and calculations for FCA returns submitted through RegData | Late or wrong returns are a compliance breach; the compliance officer often reviews or signs them off |
| Capital and liquidity | Capital resources and requirements, for example under MIFIDPRU and the ICARA for investment firms | Threshold conditions depend on adequate resources; breaches must be notified |
| Client money and safeguarding | Daily reconciliations, records and audit support under CASS, including CASS 15 safeguarding for payments and e-money firms | Client asset failures are among the most serious breaches |
| Financial crime data | Payment flows, customer transaction data and exception reports | The MLRO needs it for monitoring, investigations and the annual financial crime return |
| Consumer Duty | Price and value data, fee and charge analysis | Fair value assessments and the board’s annual Consumer Duty report |
| Wind-down planning | Costs and resources needed for an orderly wind-down | Part of adequate resources; reviewed by supervisors |
Our guide to regulatory reporting behind SMF16 and SMF17 covers the returns in more detail, and FCA regulatory reporting explained sets out the main ones.
When the Finance Team Is Weak
Where finance is under-resourced or unused to working with compliance, even a capable compliance officer or MLRO works with one hand tied. Typical symptoms:
- Regulatory returns prepared at the last minute by someone who doesn’t understand what they measure
- Client money or safeguarding reconciliations that break and aren’t investigated quickly
- The MLRO relying on periodic spreadsheet extracts rather than direct access to transaction data
- Capital calculations nobody outside finance can follow
- Fair value analysis for the Consumer Duty that is qualitative because nobody produced the numbers
None of these is the compliance officer’s fault, but all of them become the compliance officer’s problem, and potentially their personal regulatory exposure.
What a Strong Supporting Finance Team Looks Like
A CFO or FD who treats compliance as a stakeholder
The best arrangements have a finance lead who involves the compliance officer and MLRO in reporting design and financial planning, rather than treating their requests as interruptions. This is as much about attitude as technical skill. Some finance leaders are much better than others at working as partners with compliance. At larger firms the finance lead will hold SMF2; see SMF2 explained.
A financial controller who understands regulatory reporting
The person producing the figures a compliance officer relies on needs to understand what each return is measuring, not just how to fill in a template. A financial controller with regulatory reporting experience makes the compliance officer’s oversight more credible and their job easier. See financial controllers for FCA-regulated firms.
Client money and safeguarding specialists where needed
Firms holding client money or safeguarding customer funds need people who know the specific CASS rules they operate under. General finance experience is not enough. See hiring CASS accountants and safeguarding explained.
Systems that give compliance real visibility
Well-integrated finance systems can give the MLRO near real-time access to transaction data instead of periodic extracts. That is partly a technology question, but it is worth considering when the finance and compliance teams are built, not as a separate project later. See transaction monitoring explained.
Small Firms: Who Does What
At a small firm, one finance person may cover everything, often part-time, alongside a part-time or fractional compliance officer and MLRO. That can work well, provided both understand where their responsibilities meet. In practice:
- finance prepares regulatory returns and capital calculations; compliance reviews them and checks they are submitted on time;
- finance runs client money or safeguarding reconciliations; compliance monitors breaks and breaches;
- finance provides transaction data; the MLRO decides what to do with it; and
- both report to the board on their areas, so gaps can’t sit between them.
For small firms, our part-time compliance officer and MLRO service and our sister practice Accountancy Capital, which recruits finance roles below director level, often work together on exactly this pairing.
Recruit Them Together, Not in Isolation
Firms that recruit their finance lead and their compliance officer or MLRO as unrelated processes, months apart, through different recruiters with no coordination, often end up with two strong hires who were never assessed for how well they work together. Where a firm is reviewing both functions around the same time, coordinating the searches pays off: shared understanding of the firm’s regulatory reporting, clear division of responsibilities written into both job descriptions, and interview questions that test how each candidate has worked with the other function before.
Useful questions for compliance candidates: how have you worked with finance on regulatory returns, and what did you do when the numbers looked wrong? For finance candidates: what has a compliance officer or MLRO needed from you, and how did you provide it?
Warning Signs Before You Hire
Before recruiting a compliance officer or MLRO, it is worth checking whether the finance side is ready for them. Ask:
- Who prepares each regulatory return, and who checks it before submission?
- When did a return last go in late or need resubmitting, and why?
- Can the person who prepares the capital calculation explain it to the board?
- How often do client money or safeguarding reconciliations break, and how quickly are breaks resolved?
- Could the MLRO get transaction data for a single customer today, without asking finance to build a report?
If the answers are uncertain, fix the finance side at the same time, or the new compliance hire will spend their first months doing it. Candidates notice too: strong compliance officers and MLROs ask about finance support at interview, and a weak answer costs firms good candidates. See the first 90 days for a new MLRO or compliance officer.
Scenario: A payments firm hires an experienced MLRO, who quickly finds she can only see transaction data through weekly spreadsheets prepared by a stretched finance manager. The firm’s safeguarding reconciliations are also breaking regularly ahead of the CASS 15 rules taking effect. We recruit a financial controller with e-money safeguarding experience who builds direct data feeds for the MLRO and fixes the reconciliation process. The MLRO’s next annual report to the board, for the first time, includes reliable monitoring data.
Where This Sits Across the Group
SMF Capital focuses on compliance, MLRO and other SMF roles. Our sister practice FD Capital recruits CFOs, finance directors and financial controllers, including for regulated firms, and Accountancy Capital covers finance roles below director level. Where a firm is building both functions, we coordinate the searches from the start. See combined compliance officer and MLRO recruitment and multi-SMF team builds.
Compliance and Finance Recruitment
The SMF16 and SMF17 roles and the team around them. Every compliance search is overseen by Adrian Lawrence FCA
Compliance and MLRO
SMF16 and SMF17.
→ Combined SMF16/17 → MLRO recruitment (SMF17)SMF16 and SMF17 explained →
Small Firms
Part-time and fractional.
→ Part-time compliance officer → Fractional MLROHow many days a week? →
Finance Leadership
SMF2 and finance heads.
→ Chief Financial Officer (SMF2) → Financial crime leadershipRegulatory reporting support →
Client Assets
Client money and safeguarding.
→ Payments and fintech → SMF recruitment for wealth managementCASS oversight explained →
Every compliance search is overseen by Adrian Lawrence FCA
Frequently Asked Questions
Why does a compliance officer depend on finance?
Because regulatory returns, capital, client money and much of the data behind compliance and financial crime oversight come from the finance team.
Who prepares regulatory returns?
Usually finance prepares them and compliance reviews them, but the firm should set out who does what clearly.
What does an MLRO need from finance?
Access to transaction and customer data, ideally directly rather than through periodic extracts.
Should we recruit finance and compliance together?
Where both are being hired around the same time, coordinating the searches produces people who work better together.
Do small firms need a separate finance and compliance person?
Often both are part-time, but they should be different people with clearly divided responsibilities.
About the Author
Adrian Lawrence FCA is the founder of SMF Capital. He is a Chartered Accountant and Fellow of the ICAEW, holds a practising certificate in his own name, and is a former listed-company Finance Director with a BSc from Queen Mary College, University of London. He founded FD Capital in 2018 and has since built a network of five specialist recruitment practices. He oversees every SMF Capital search. View Adrian’s ICAEW profile.
Building Your Compliance and Finance Team?
Tell us about your firm and the roles you need. We’ll come back with a coordinated plan the same working day.
Adrian Lawrence FCA is the founder of SMF Capital and a Fellow of the Institute of Chartered Accountants in England and Wales and holds an ICAEW practising certificate in his own name. He holds a BSc from Queen Mary College, University of London, and has over 25 years of experience working with boards, investors and business owners across the UK. He founded SMF Capital to help FCA and PRA-regulated firms appoint the Senior Managers the regulators expect, with the fit and proper assessment built into every search, and oversees every Senior Manager Function search.