MLRO Interview Questions: How to Test a Candidate’s Financial Crime Judgement
Most MLRO candidates can describe the Money Laundering Regulations. Far fewer can make a sound decision at five o’clock on a Friday when a suspicious payment is waiting to be released and the sales team is pushing to let it through. The MLRO role is, above all, a role of judgement, and a CV rarely shows it. This guide sets out scenario-based interview questions that test how an MLRO candidate actually thinks, what good answers look like and the red flags that should make you pause.
Why Scenario Questions Work for MLROs
Knowledge-based questions (“What are the customer due diligence requirements?”) tell you whether a candidate has read the rules. Scenario questions tell you whether they can apply them under pressure, with incomplete information and competing interests. That is what the regulator expects of a Money Laundering Reporting Officer holding SMF17, and it is what protects the firm. The FCA’s Financial Crime Guide repeatedly emphasises judgement, proportionality and a risk-based approach rather than mechanical compliance.
These questions sit alongside the general Senior Manager interview questions in our guide to interviewing an SMF candidate, which covers accountability, Statements of Responsibilities and board communication. Use both.
Scenario Questions and What Good Answers Look Like
1. The suspicious activity decision
Question: “An internal report lands on your desk about a long-standing customer whose transactions have suddenly increased fivefold, with funds moving to a jurisdiction the customer has never dealt with before. The relationship manager says there’s an innocent explanation. Walk me through what you do.”
Good answers show a structured approach: gathering information from the relationship manager and the customer file without tipping off the customer, reviewing the customer’s risk profile and history, considering whether the explanation is plausible and evidenced, reaching a documented decision on whether there is knowledge or suspicion, and submitting a SAR to the National Crime Agency if there is. Strong candidates also mention updating the customer’s risk rating and monitoring.
Red flags: accepting the relationship manager’s explanation without testing it, or reporting automatically without forming a view.
2. The defence against money laundering request
Question: “A customer has instructed a large outbound payment, and you have a suspicion about the source of the funds. What are your options, and what happens next?”
Good answers explain that the firm may need to seek consent, known as a defence against money laundering (DAML), before proceeding, and describe the waiting periods and the risk of tipping off while the payment is held. They should show they understand how to manage the customer relationship during that period and how to record each step. Candidates don’t need to quote statutory periods precisely, but they should know the mechanism exists and how it works in practice.
Red flags: unfamiliarity with the DAML process, or suggesting the firm tell the customer why the payment is delayed.
3. The sanctions hit
Question: “Your screening system flags a potential match between a new payee and a name on the UK sanctions list. It’s late in the day and the payment is urgent. What do you do?”
Good answers distinguish between a potential match and a confirmed one, describe how they would investigate using identifiers such as date of birth, nationality and address, explain that the payment must not proceed while the match is unresolved, and mention reporting obligations to the Office of Financial Sanctions Implementation where a match is confirmed. Our guide to sanctions screening covers the framework.
Red flags: treating sanctions as a variant of money laundering risk to be “risk-assessed” away, or letting urgency override investigation.
4. Onboarding a politically exposed person
Question: “The business wants to onboard a senior foreign official as a private client. They’re bringing significant assets. How do you approach it?”
Good answers cover enhanced due diligence, establishing source of wealth and source of funds, senior management approval, enhanced ongoing monitoring and a proportionate view of the actual risk the individual presents. Strong candidates note that PEP status alone is not a reason to refuse business, but that the firm must understand and be comfortable with the risk. See our guide to politically exposed persons.
Red flags: either a blanket refusal to deal with PEPs or a willingness to rely on the client’s own account of their wealth.
5. Pushback from the business
Question: “The head of sales tells you that your new onboarding checks are losing the firm customers and asks you to relax them. The chief executive is sympathetic. How do you handle it?”
Good answers show the candidate can engage constructively, looking for ways to make controls more efficient without weakening them, while holding the line on what the risk requires. They should describe escalating to the board if necessary and documenting the disagreement. This question tests independence, which the FCA’s SYSC 6.3 rules expect firms to protect.
Red flags: either immediate capitulation or a rigid refusal to engage with the commercial concern at all.
6. Cryptoassets and the travel rule
Question (for crypto and payments roles): “A customer wants to withdraw cryptoassets to an unhosted wallet, and blockchain analytics shows indirect exposure to a mixing service. What do you consider?”
Good answers discuss the travel rule information requirements, the risk of unhosted wallets, how to interpret analytics scores rather than relying on them blindly, and whether the exposure gives rise to suspicion. Strong candidates explain the limits of their tools. See our page on crypto-asset SMF recruitment.
Red flags: no familiarity with blockchain analytics, or treating a risk score as a decision.
Scoring the Answers
| What to assess | Strong candidate | Weak candidate |
|---|---|---|
| Structure | Gathers facts, assesses, decides, documents | Jumps to a conclusion |
| Legal accuracy | Understands reporting, consent and tipping-off obligations | Vague or wrong on core obligations |
| Risk-based judgement | Proportionate, explains why | Either refuses everything or accepts everything |
| Independence | Engages with the business but holds the line | Defers to seniority |
| Record-keeping | Mentions documenting decisions unprompted | Doesn’t mention it |
| Sector knowledge | Uses typologies relevant to your firm | Generic answers that could apply anywhere |
Beyond the Scenarios
Scenario questions should be combined with evidence. Ask for anonymised examples of SAR decisions, board reports or risk assessments the candidate has produced. Take references from people who saw them under pressure. Check previous approvals and regulatory history before the final interview; see our guide to pre-offer checks for SMF candidates. And involve the right people: an audit or risk committee chair or an experienced financial crime adviser on the panel will spot weak answers that a generalist might miss.
- Use the same scenarios for every candidate so answers can be compared
- Adapt scenarios to your sector: payments, wealth, lending, crypto or insurance
- Give candidates a few minutes to think before answering
- Probe with follow-up questions: “What if the customer complained?” or “What if the CEO overruled you?”
- Record answers and scores immediately after each interview
Scenario: A wealth management firm interviews two MLRO candidates with similar CVs. Asked about a PEP client bringing significant assets, the first describes the enhanced due diligence checklist in detail but cannot explain how they would decide whether the source of wealth was credible. The second asks what evidence of the client’s career and business interests is available, explains how she would corroborate it independently and says she would document a risk-based recommendation for senior management approval. The firm appoints the second candidate, whose answers showed the judgement the role needs.
How We Assess MLRO Candidates
When we run an MLRO search, we test financial crime judgement before candidates reach your shortlist, using scenarios tailored to your sector and risk profile. Adrian Lawrence FCA interviews every shortlisted candidate personally, and every candidate is pre-assessed for approvability. Whether you need a permanent hire, a fractional MLRO or broader financial crime leadership, see our MLRO recruitment service for how we work.
MLRO Recruitment
Financial crime leaders with proven judgement. Every MLRO search is led personally by Adrian Lawrence FCA
Every MLRO search is led personally by Adrian Lawrence FCA
Frequently Asked Questions
How many scenario questions should we use?
Three or four, chosen for your sector, is usually enough for a first or second interview. Go deep rather than broad.
Should a non-specialist interview an MLRO?
The chief executive and board should be involved, but include someone with financial crime expertise on the panel, or use a specialist recruiter to pre-assess candidates.
Can the FCA interview an MLRO candidate?
Yes, the regulator may interview candidates for Senior Manager roles. Candidates who handle scenario questions well at your interview are usually better prepared for that too.
What if no candidate answers well?
Don’t appoint for the sake of filling the role. Consider interim or fractional cover while you widen the search.
Are these questions suitable for a deputy MLRO?
Yes, adapted to the level of the role. They are a good way to assess whether a deputy is ready to step up.
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 search personally. View Adrian’s ICAEW profile.
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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 personally leads every Senior Manager Function search.
