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Fractional MLRO
Services UK
Outsourced Money Laundering Reporting Officer services for UK regulated firms. SMF17-approved MLROs for FinTech, crypto, payments, and consumer credit.
£1,100
Avg Day Rate
SMF17
FCA Approved
1-2
Days/Week
Definition
What is a Fractional MLRO?
A fractional MLRO (Money Laundering Reporting Officer) is an outsourced AML professional who provides MLRO services to regulated firms on a part-time basis—typically 1-2 days per week.
In the UK, the MLRO is a critical regulatory role defined under the Money Laundering Regulations 2017 and, for FCA-authorised firms, requires SMF17 approval. The MLRO acts as the firm's nominated officer—the person responsible for receiving internal suspicious activity reports and determining whether to submit SARs to the National Crime Agency.
Personal Accountability
The MLRO has personal regulatory accountability for AML compliance. Unlike advisory roles, an MLRO can face FCA enforcement action, fines, and prohibition for failures. This is why experienced MLROs command premium rates—they accept significant personal regulatory risk.
Why Outsource the MLRO Function?
Many regulated firms, particularly FinTech startups and smaller financial services companies, find that:
- Full-time MLRO cost is prohibitive — £80,000-£150,000 annual salary plus benefits
- AML workload is part-time — Many firms don't generate enough SARs or monitoring activity for full-time
- Specialist expertise is needed — Crypto, payments, and other sectors need specific AML knowledge
- Rapid deployment required — For authorisation or when existing MLRO leaves
Regulatory
FCA Requirements for MLROs
SMF17: MLRO Function
For FCA-authorised firms, the MLRO must hold SMF17 approval under the Senior Managers Regime. Key requirements include:
- FCA pre-approval via Form A application
- Fitness and propriety assessment
- Criminal records (DBS) check
- Regulatory references from previous employers
- Statement of Responsibilities defining accountability
Can the MLRO Be Outsourced?
Yes, the FCA permits outsourcing of the MLRO function. However:
- The outsourced individual must meet the same FCA approval requirements
- The firm retains ultimate responsibility for AML compliance
- Appropriate outsourcing arrangements and SLAs must be in place
- The firm must maintain oversight of the outsourced function
MLRO vs Deputy MLRO
Firms must have arrangements for MLRO cover during absence. This can be addressed through:
- Deputy MLRO — Formal appointment of a deputy (may need SMF17 approval depending on role)
- Fractional MLRO provider cover — Many fractional MLRO firms provide colleague cover
- Documented escalation procedures — Clear protocols for MLRO absence
Responsibilities
What Does a Fractional MLRO Do?
SAR Management
- •Receiving internal suspicious activity reports
- •Assessing and investigating potential SARs
- •Submitting SARs to the National Crime Agency
- •Managing SAR triage and decision-making
- •Maintaining SAR records and audit trail
AML Framework
- •Developing and maintaining AML policies
- •Overseeing the firm-wide risk assessment
- •Managing customer due diligence standards
- •Implementing enhanced due diligence processes
- •Ensuring sanctions and PEP screening
Transaction Monitoring
- •Overseeing transaction monitoring systems
- •Setting and reviewing monitoring rules
- •Investigating escalated alerts
- •Managing false positive rates
- •Ensuring adequate coverage of ML typologies
Governance & Reporting
- •Annual MLRO report to the board
- •Quarterly AML MI and reporting
- •Attending risk and compliance committees
- •Escalating AML issues to senior management
- •Regulatory liaison on AML matters
Training & Culture
- •AML training programme oversight
- •Staff awareness and communication
- •Building an anti-money laundering culture
- •Advising business on AML implications
Regulatory Compliance
- •Monitoring regulatory change (JMLSG, FCA)
- •Travel Rule implementation
- •Crypto-specific AML requirements
- •FCA annual financial crime returns
Sectors
Who Needs a Fractional MLRO?
| Industry | Regulation | AML Risk | MLRO Demand |
|---|---|---|---|
| FinTech & Payments | FCA (EMI, PI) | High | Very High |
| Crypto & Digital Assets | FCA Crypto Registration | Very High | Very High |
| Consumer Finance | FCA (Consumer Credit) | Medium-High | High |
| Investment Management | FCA (MiFID II) | Medium | Medium |
| Wealth Management | FCA (COBS) | High | High |
| Money Service Businesses | HMRC MLR | Very High | High |
Crypto and Digital Assets
The FCA crypto registration regime has created significant demand for MLROs with crypto-specific AML expertise. Crypto firms face unique challenges including Travel Rule implementation, on-chain monitoring, and rapidly evolving typologies.
FinTech and Payments
EMIs (Electronic Money Institutions) and Payment Institutions are high-volume, lower-value businesses that require sophisticated transaction monitoring and customer due diligence. Fractional MLROs with payments experience understand the balance between friction and financial crime risk.
Comparison
Fractional vs Full-Time MLRO
| Factor | Fractional MLRO | Full-Time MLRO |
|---|---|---|
| Annual Cost | £36,000-£72,000 | £100,000-£180,000 |
| Time Commitment | 1-2 days per week | Full-time (5 days) |
| SMF17 Accountability | Yes | Yes |
| Cross-Firm Experience | High (multiple firms) | Limited (single firm) |
| SAR Response Time | Same day on scheduled days; next day otherwise | Immediate (during hours) |
Pricing
Cost of Outsourced MLRO Services
| Engagement Level | Day Rate | Monthly Cost | Annual Cost |
|---|---|---|---|
| Light Touch (1 day/week) | £900-£1,300 | £3,600-£5,200 | £43,200-£62,400 |
| Standard (2 days/week) | £900-£1,300 | £7,200-£10,400 | £86,400-£124,800 |
| MLRO + CCO Combined | £1,100-£1,500 | £8,800-£12,000 | £105,600-£144,000 |
Most FinTech and payment firms engage fractional MLROs for 1 day per week at a cost of £3,500-£5,000 per month. This provides sufficient time for SAR management, monitoring oversight, and governance reporting.
FAQ
Fractional MLRO: Common Questions
A fractional MLRO (Money Laundering Reporting Officer) is an outsourced professional who fulfils the SMF17 role on a part-time basis—typically 1-2 days per week. They have FCA approval to act as your firm's nominated officer for suspicious activity reporting and oversee your AML/CTF framework. Fractional MLROs work across multiple regulated firms, bringing expertise from various sectors.
Yes, the FCA permits outsourcing of the MLRO (SMF17) function. The outsourced individual must be FCA-approved and meet fitness and propriety requirements. However, your firm retains ultimate responsibility for AML compliance—you cannot outsource regulatory accountability. Most FinTech, EMI, and crypto firms successfully use outsourced MLROs.
Fractional MLROs in the UK charge £900-£1,300 per day, or £3,000-£8,000 per month on retainer (1-2 days per week). This compares to £80,000-£150,000+ annually for a full-time MLRO. A fractional MLRO working 1 day per week costs approximately £48,000-£62,000 annually—significant savings for smaller firms.
A fractional MLRO manages your AML/CTF framework including: receiving and assessing internal suspicious activity reports, submitting SARs to the NCA, overseeing transaction monitoring, maintaining AML policies and procedures, providing annual MLRO reporting to the board, managing AML training, and liaising with regulators on AML matters.
Fractional MLROs are ideal for: FCA-authorised firms within scope of the Money Laundering Regulations, FinTech and payment firms (EMIs, PIs), crypto businesses with FCA registration, consumer credit firms, smaller investment firms, and any regulated firm that cannot justify a full-time MLRO salary but needs SMF17 coverage.
Yes, one person can hold both SMF16 (Compliance Oversight) and SMF17 (MLRO) at the same firm. This is common at smaller firms. However, the FCA expects the individual to have sufficient time and expertise for both roles. For firms with significant AML complexity, separating the roles may be appropriate.
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