What a Fractional or Part-Time MLRO Is

The MLRO is the person responsible for the firm’s anti-money laundering arrangements and for deciding whether suspicions must be reported to the National Crime Agency. Under the Senior Managers and Certification Regime, the role is the Money Laundering Reporting function, SMF17, at Core and Enhanced firms. Under the Money Laundering Regulations 2017, the firm must appoint a nominated officer. In most firms, one person does both.

A fractional MLRO holds that role on a part-time basis. They are not an adviser who supports someone else: they are the firm’s MLRO, approved by the FCA, named on the firm’s responsibilities map, and personally accountable under the Senior Manager Conduct Rules and the Duty of Responsibility. The difference from a full-time MLRO is the time commitment, not the accountability. Our guide to the MLRO role and SMF17 sets out the responsibilities in full.

When a Part-Time or Fractional MLRO Makes Sense

Fractional arrangements work well where the firm’s financial crime risk is real but its volume of activity doesn’t justify a full-time senior hire. The most common situations we see are:

• Newly authorised or applying firms. Payments, e-money and cryptoasset businesses need a credible MLRO named in their application, often before they have revenue. See the people behind payments and e-money authorisation.
• Smaller wealth managers, brokers and investment firms. Firms with a modest client base and a manageable number of alerts often need one or two days a week of senior financial crime leadership.
• Firms combining roles. A fractional appointee can hold SMF16 and SMF17 together where one person has the experience and time for both; see our page on recruiting a compliance officer who is also the MLRO. Our guide to combining Senior Manager roles covers the regulator’s expectations.
• Firms that have outgrown an unqualified MLRO. Where the role has been held by a director without real financial crime experience, a fractional specialist brings expertise without a full-time salary.

A fractional MLRO is not the right answer for every firm. High-volume payment processors, firms with complex correspondent or cross-border flows, and firms under remediation or supervisory pressure usually need more senior time than a fractional model gives. We will tell you honestly if we think your firm needs a full-time MLRO; see our MLRO recruitment page for permanent searches.

Part-Time MLRO or “MLRO Services”?

Many firms start by searching for MLRO services or an outsourced MLRO, expecting to buy the role from a consultancy in the same way they might buy screening or file reviews. It is worth being clear about what can and can’t be outsourced. Day-to-day anti-money laundering tasks, such as screening, transaction monitoring alerts, customer due diligence checks and policy drafting, can all be carried out by an external provider. The MLRO role itself cannot be held by a firm. It must be an individual, approved by the FCA where the role is SMF17, who personally takes the reporting decisions and carries the accountability.

A part-time MLRO is how most smaller firms get the best of both. They appoint one experienced, approved individual for an agreed number of days a week, and, where volumes justify it, use an outsourced provider for routine work under that person’s oversight. Our guide to what you can and can’t outsource covers the principles in more detail.

Fractional, Interim or Full-Time?

What the FCA Will Look For

The FCA accepts fractional and part-time Senior Managers, but it will test whether the arrangement is credible. When it assesses a fractional MLRO’s application, or reviews the arrangement during supervision, it is likely to look at:

• Time commitment. Is one or two days a week enough for the firm’s customer base, products, geographies and alert volumes? The firm should be able to explain how it reached that figure.
• Availability. How does the MLRO deal with urgent matters on days they aren’t working, such as a suspicious activity report that must be made quickly or a request for a defence against money laundering?
• Other commitments. How many other firms does the person work for, and could their commitments conflict or overload them?
• Support. Does the MLRO have a deputy, analysts or an outsourced provider to carry out day-to-day monitoring, so that their time is spent on judgement and oversight?
• Competence. Does the candidate have experience relevant to this firm’s risks, assessed against the fit and proper test?

The FCA’s SYSC 6.3 rules require firms to give the MLRO sufficient resources and independence. A fractional arrangement that is well documented on these points is much more likely to be approved, and to stand up to later scrutiny.

How We Recruit a Part-Time or Fractional MLRO

• Scope the risk and the time. We start with your business model, customers and transaction volumes, and agree a realistic number of days before we search.
• Search the specialist pool. We approach experienced MLROs who work on a portfolio basis, and senior financial crime professionals ready to move into fractional work, prioritising relevant sector experience.
• Check capacity and conflicts. We confirm each candidate’s other commitments and how they would cover urgent matters.
• Fit and proper pre-assessment. Previous approvals, regulatory references and history are checked before the shortlist.
• Personal interviews. Adrian Lawrence FCA interviews every shortlisted candidate.
• Agreement and approval. We help you agree terms and support the Form A and Statement of Responsibilities. Our guide to fractional SMF agreements sets out what the contract should cover.

What Good Part-Time and Fractional MLRO Candidates Bring

Fractional MLROs for Cryptoasset Firms

Cryptoasset businesses are among the most frequent users of fractional MLROs, and among the most closely scrutinised. The FCA expects crypto firms to show genuine competence in sector-specific risks, and the pool of approved MLROs with real cryptoasset experience is small. A fractional model can give a crypto firm access to that experience at an affordable cost, but the time commitment must reflect the higher risk of the sector. We recently placed a fractional compliance and financial crime lead holding both SMF16 and SMF17 with a cryptoasset business to support its FCA application; see our case studies and our page on crypto-asset SMF recruitment.

Cost and Contract Terms

Fractional MLROs are usually engaged on a day rate or a monthly retainer for an agreed number of days. Rates reflect the candidate’s experience, the firm’s risk profile and whether the role includes SMF16 as well. Our SMF and compliance salary guide gives current benchmarks. Whatever the structure, the agreement should cover the minimum time commitment, availability for urgent matters, access to systems and the board, cover for absences, and notice periods long enough to arrange a replacement, because the MLRO role can’t simply be left empty.

Frequently Asked Questions

Can an MLRO be part-time?

Yes. The FCA accepts part-time and fractional MLROs, provided the time commitment and resources are adequate for the firm’s size and risks, and the MLRO can deal with urgent matters.

Does a fractional MLRO need FCA approval?

Yes, where the firm is within the SMCR and the role is SMF17. Approval is needed before they start, exactly as for a full-time MLRO.

Is a fractional MLRO the same as outsourcing AML?

No. Day-to-day tasks such as screening and monitoring can be outsourced, but the MLRO is an individual with personal accountability. A fractional MLRO is that individual, working part of the week.

How many days a week does a fractional MLRO work?

Typically one to three, depending on the firm’s risk profile, volumes and the support available. We help you agree a realistic figure before the search starts.

How quickly can you shortlist?

Usually within two to three weeks, because many fractional MLROs are available without long notice periods.