What Is an MLRO? The Money Laundering Reporting Officer Explained
MLRO stands for Money Laundering Reporting Officer: the person in a regulated business responsible for its defences against money laundering and terrorist financing, and for deciding whether suspicions are reported to the National Crime Agency. At firms within the Senior Managers regime, the MLRO holds a Senior Manager Function, SMF17, and must be approved by the FCA before starting. This guide explains what the role involves, the legal duties that come with it, who can be an MLRO, and how firms recruit one.
What Does MLRO Stand For?
MLRO stands for Money Laundering Reporting Officer. The term comes from the FCA’s rules, which require authorised firms to appoint an individual with responsibility for oversight of their compliance with the rules on systems and controls against money laundering. The Money Laundering Regulations 2017 separately require firms in scope to appoint a nominated officer, the person who receives internal reports of suspicion and decides whether to report to the National Crime Agency. In most firms, the MLRO and the nominated officer are the same person, and “MLRO” is used for both.
What Does an MLRO Do?
| Area | What the MLRO is responsible for |
|---|---|
| Risk assessment | Overseeing the firm’s business-wide money laundering and terrorist financing risk assessment, and keeping it current |
| Policies and controls | Making sure policies and procedures for customer due diligence, enhanced due diligence, monitoring and record-keeping are appropriate and work in practice |
| Suspicious activity reports | Receiving internal reports from staff, investigating them, and deciding whether to submit a suspicious activity report (SAR) to the NCA |
| Defence against money laundering requests | Seeking consent from the NCA, where needed, before the firm proceeds with a transaction it suspects |
| Training | Making sure staff understand money laundering risks and how to report suspicions |
| Reporting to the board | Reporting on the effectiveness of the firm’s financial crime controls, at least annually, usually through an MLRO report |
| Regulator liaison | Acting as the main contact with the FCA and law enforcement on financial crime matters |
Many MLROs also oversee sanctions screening, fraud prevention and anti-bribery controls, although these aren’t always part of the formal role. The FCA’s Financial Crime Guide and its systems and controls rules in SYSC 6 set out what the regulator expects.
The MLRO’s Legal Duties
The MLRO role carries personal legal responsibility as well as regulatory accountability. Under the Proceeds of Crime Act 2002, the nominated officer can commit a criminal offence by failing to report knowledge or suspicion of money laundering, or reasonable grounds for it, received through an internal report. Everyone in the regulated sector must also avoid tipping off: disclosing information likely to prejudice an investigation.
When the firm wants to proceed with an activity it suspects involves criminal property, the MLRO can request a defence against money laundering from the National Crime Agency. The NCA has a notice period of seven working days to respond, and if it refuses, a further moratorium period follows. Managing these requests carefully, without tipping off the customer, is one of the most sensitive parts of the role.
SMF17: The MLRO Under the Senior Managers Regime
At firms within the Senior Managers and Certification Regime, the MLRO holds SMF17, the Money Laundering Reporting Function. That means:
- FCA approval is needed before the MLRO can start in the role
- the MLRO must meet the fit and proper test
- they need a Statement of Responsibilities setting out what they’re accountable for
- they’re subject to the Senior Manager Conduct Rules and the Duty of Responsibility
The FCA expects a firm’s MLRO to have enough seniority, independence and resources to do the job, and to be based in the UK. Our SMF16 and SMF17 guide explains how the role relates to compliance oversight.
MLROs Outside the Senior Managers Regime
Payment institutions, e-money institutions and crypto-asset businesses registered with or authorised by the FCA aren’t in the Senior Managers regime, so their MLROs don’t hold SMF17. They still need an MLRO and nominated officer, and the FCA still assesses whether that person is suitable, often closely, because financial crime risk in these sectors is high. See our payments and fintech and crypto-asset sector pages.
Who Can Be an MLRO?
| Question | Short answer |
|---|---|
| Does the MLRO have to be a director? | No, but they need enough seniority to act independently and access to the board |
| Can a director be the MLRO? | Yes, and it’s common at smaller firms |
| Can the compliance officer also be the MLRO? | Yes. Combining SMF16 and SMF17 is common at smaller firms |
| Can the MLRO be part-time or fractional? | Yes, if the time commitment is adequate for the firm’s risks |
| Can the role be outsourced? | Support can be outsourced, but an individual must hold the role and, at SMCR firms, be approved as SMF17 |
| Does the MLRO need a qualification? | No qualification is mandatory, but ICA diplomas or ACAMS certification are strong evidence of competence |
Our guide to who can be your MLRO or compliance officer answers these questions in more detail, and our page on combining Senior Manager roles explains which combinations the FCA questions.
Skills and Experience Firms Look For
- Sector-specific financial crime experience. A payments MLRO needs to understand merchants, agents and fraud typologies. A wealth manager needs deep source-of-wealth expertise. A crypto-asset firm needs blockchain analytics experience.
- Judgement on suspicious activity. Deciding what to report, and when, is the heart of the role.
- Confidence with the board and the regulator. MLROs have to challenge the business and explain their decisions clearly.
- Experience building controls, especially at growing firms and those preparing for authorisation.
- Experience of remediation, for firms under supervisory scrutiny or a skilled person review.
The Deputy MLRO
Many firms appoint a deputy MLRO to cover absences and support the MLRO. It isn’t always required, but it’s good practice, especially where the MLRO is part-time or fractional, because internal reports need to be dealt with promptly. A deputy MLRO role is also the most common route into a first MLRO appointment.
The MLRO Report
The MLRO should report to the board at least annually on the operation and effectiveness of the firm’s anti-money laundering systems and controls. A good MLRO report covers the firm’s risk assessment, the volume and themes of internal reports and SARs, the results of monitoring and testing, training completion, and any weaknesses found, with clear recommendations. Boards should challenge it, not just note it.
A growing payments business has been relying on its compliance lead to act as MLRO alongside a heavy compliance workload. Alerts are building up and the FCA has asked about its transaction monitoring. The firm appoints an experienced fractional MLRO with payments experience, three days a week, names the compliance lead as deputy MLRO, and asks the new MLRO to deliver a report to the board within 90 days on the effectiveness of its controls.
What Does an MLRO Earn?
MLRO pay varies widely with the size and risk of the firm, the sector and whether the role is combined with compliance oversight. Interim and fractional MLROs usually work on day rates. Our SMF and compliance salary guide sets out current salary ranges and day rates for MLROs and related roles, kept up to date as the market moves.
When an MLRO Leaves
A firm can’t be without a nominated officer. If the MLRO resigns or leaves unexpectedly, the firm needs someone to receive internal reports immediately, and at SMCR firms, the 12-week rule allows temporary cover while a permanent appointment is approved. Our 30-day plan for when an MLRO resigns sets out the steps.
Starting as an MLRO
New MLROs should start by understanding what they’re inheriting: the risk assessment, open internal reports, recent SARs, monitoring alerts, findings from any reviews, and the board’s understanding of financial crime risk. Our guide to the first 90 days for a new MLRO or compliance officer includes a plan and a log for recording what you take on.
MLRO Recruitment
Permanent, interim and fractional MLROs for regulated firms. Every SMF search is led personally by Adrian Lawrence FCA
MLRO Recruitment
SMF17 and nominated officer roles.
→ MLRO recruitment (SMF17)
→ Compliance officer (SMF16)
Fractional and Interim
Cover and part-time arrangements.
→ Fractional and interim cover
→ Fractional or full-time?
High-Risk Sectors
Where MLRO experience is sector-specific.
→ Payments and fintech
→ Crypto-assets
Getting Approved
Fitness, timing and pay.
→ The fit and proper test
→ SMF timing and eligibility
Every SMF search is led personally by Adrian Lawrence FCA
Frequently Asked Questions
What does MLRO stand for?
Money Laundering Reporting Officer.
What is the difference between an MLRO and a nominated officer?
The nominated officer is the role required by the Money Laundering Regulations to receive internal reports and decide whether to report to the NCA. The MLRO is the FCA’s term for the person overseeing anti-money laundering systems and controls. In most firms, one person does both.
Is the MLRO a Senior Manager?
At firms in the Senior Managers regime, yes: the MLRO holds SMF17 and needs FCA approval. At payment, e-money and crypto-asset firms outside the regime, the MLRO doesn’t hold an SMF but the FCA still assesses them.
Can an MLRO be held personally liable?
Yes. The nominated officer can commit criminal offences, for example by failing to report a suspicion received through an internal report, and SMF17 holders are personally accountable to the FCA.
Does every firm need an MLRO?
Every firm within the scope of the Money Laundering Regulations needs a nominated officer, and FCA-authorised firms generally need an MLRO. Some firms with limited activities may be outside the Regulations; check your firm’s position.
Can you find us an MLRO?
Yes. MLROs are among the appointments we make most often, permanent, interim and fractional, across every regulated sector.
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 leads every SMF Capital MLRO search personally, including fractional and interim appointments at payments, crypto-asset and wealth firms. View Adrian’s ICAEW profile.
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