MLROs · the role
What does an MLRO do?
The short answer · updated
An MLRO, or money laundering reporting officer, is the person a regulated business makes responsible for its anti-money laundering controls. The MLRO receives internal suspicion reports, decides whether to send a Suspicious Activity Report to the National Crime Agency, and oversees checks and training. In an FCA-regulated firm the role is SMF17, needs FCA approval and reports to the board.
What is an MLRO?
An MLRO is a money laundering reporting officer: the one named person inside a business who owns its defences against money laundering and terrorist financing, and who decides what the business reports to the authorities. Two sets of rules create the role.
In an FCA-regulated firm, the FCA Handbook requires firms within the scope of its financial crime rules to appoint an individual as MLRO, responsible for oversight of the firm’s compliance with the FCA’s rules on systems and controls against money laundering, and to give that person enough authority, independence, resources and information to do it. The FCA calls the MLRO the focal point for all anti-money laundering activity in the firm, and expects them to be based in the United Kingdom. Under the Senior Managers Regime the role is the Money Laundering Reporting Function, SMF17.
Under the Money Laundering Regulations, every business in scope must appoint a nominated officer to receive internal disclosures and, where appropriate to its size and nature, a board member or senior manager responsible for its compliance with the Regulations. It must tell its supervisor who holds each role within 14 days of the appointment. Many businesses outside financial services use the MLRO title for the same person.
The Regulations reach well beyond banks. HMRC’s guidance lists the sectors they cover, including accountants, estate and letting agents, solicitors, money service businesses and trust or company service providers, each supervised by the FCA, HMRC, the Gambling Commission or a professional body.
What an MLRO does day to day
The core of the job is a decision. When a member of staff reports a suspicion, the nominated officer must consider it against everything else the business knows and decide whether it gives rise to knowledge or suspicion of money laundering or terrorist financing. If it does, the MLRO sends a Suspicious Activity Report to the UK Financial Intelligence Unit at the National Crime Agency. The NCA notes that a valid report may also give the business a defence to a principal money laundering offence.
Around that decision, the week usually covers:
- The risk assessment: the business-wide view of where its customers, products, channels and countries expose it to money laundering.
- Policies and controls: customer due diligence, enhanced checks for higher-risk customers, sanctions screening and transaction monitoring.
- Internal reports: a route for staff to raise suspicions, a record of every decision, and care not to tip off the customer.
- Training: making sure staff can spot and report what they see.
- Board reporting: in an FCA firm, a report at least annually to the governing body and senior management on how well the systems and controls work.
- The supervisor and law enforcement: registrations, returns, visits, and requests for information after a report.
Why the MLRO is personally accountable
The role carries personal legal risk. Under the Proceeds of Crime Act 2002, a nominated officer in the regulated sector who knows or suspects money laundering from a staff disclosure, and does not report it as soon as is practicable, commits a criminal offence unless they have a reasonable excuse. The NCA warns that failing to report when the law requires it can lead to prosecution and regulatory action.
In an FCA firm, SMF17 is a Senior Management Function. Holders need FCA or PRA approval before starting, must be fit and proper, and carry the Duty of Responsibility: if the firm breaches a requirement in their area, they can be held to account if they did not take reasonable steps to prevent it.
That is why the authority and independence the FCA asks for matter. An MLRO who cannot see the information, or who is overruled by the people whose business they are reviewing, cannot do the job.
MLRO vs compliance officer vs MLCO
A compliance officer covers the whole regulatory system; at the senior level in an FCA firm that is SMF16, Compliance Oversight. The MLRO owns financial crime. The FCA notes that SMF16 and SMF17 are often held by people who are not members of the governing body, and in a small firm one approved person can hold both.
The MLCO is a name sometimes given to the officer that regulation 21(1)(a) of the Money Laundering Regulations calls the officer responsible for compliance: a board member or senior manager. In an FCA firm the director or senior manager with overall responsibility for anti-money laundering systems may also be the MLRO.
A deputy MLRO covers absences and handles the day-to-day caseload in a larger firm, so that suspicion reports are never left waiting.
A data protection officer is a separate, statutory privacy role. The MLRO works closely with the general counsel and the head of compliance; compliance officer jobs shows the wider seat.
Skills and qualifications an MLRO needs
No qualification is required by law. Employers look for judgement under pressure, a working knowledge of the Proceeds of Crime Act, the Terrorism Act and the Money Laundering Regulations, knowledge of their sector’s guidance, and the standing to tell senior people that a deal cannot proceed.
The International Compliance Association describes its Diploma in Anti Money Laundering, a level 6 qualification, as the industry standard for MLROs and professionals managing money laundering risk. Many MLROs come from compliance, financial crime operations, audit, law or the police.
In an FCA firm, the candidate must be fit and proper and approved before taking up SMF17. The firm must take regulatory references and, unless an exemption applies, run a criminal records check as part of the application.
Fractional, interim and permanent MLROs
A permanent MLRO suits a firm with a steady flow of alerts and reports: a bank, a large payments or e-money business, an insurer or a large professional firm.
A fractional MLRO holds the role for set days a week, often in a smaller FCA-authorised firm, fintech or payments business. The FCA allows one person to hold more than one SMF; an executive director may also hold SMF17, with approval sought for each. Whatever the days, the MLRO still needs the authority, access and cover the role demands.
An interim MLRO covers a departure, a remediation programme or a regulatory review. The FCA’s 12-week rule lets someone cover a senior manager’s temporary or reasonably unforeseen absence for less than 12 consecutive weeks without approval, so a firm has time to apply for a replacement.
Where a fractional or interim MLRO works through their own limited company, the off-payroll working rules (IR35) may apply. Status turns on how the engagement runs in practice, and a medium or large client makes the determination. Our IR35 guide sets out the tests.
What an MLRO earns, and how to hire one
Pay depends on the sector and supervisor, the size and risk of the firm, whether the role is SMF17, the volume of reports, qualifications and location. Permanent MLROs are paid a salary; fractional and interim MLROs a day rate. We publish no MLRO pay figure because we have no independent sourced one; the listings on MLRO jobs show pay where the posting states it.
To hire, start with the obligation: which supervisor, whether the FCA must approve the appointment, and how many days a week the alerts, reports and board reporting really take. Then decide permanent, interim, fractional or part-time.
We recruit permanent, interim, fractional, part-time and temporary compliance leaders, and non-executive directors. To hire an MLRO, every brief gets a shortlist of 3–5 after five-stage vetting, each with pay or day rate, availability and IR35 position set out.
Questions people ask
What does MLRO stand for?
Money laundering reporting officer: the person in a regulated business who receives internal suspicion reports, decides whether to report them to the National Crime Agency, and owns the business’s anti-money laundering controls.
Is an MLRO a legal requirement?
For most businesses covered by the Money Laundering Regulations, yes: they must appoint a nominated officer and tell their supervisor within 14 days. An individual who neither employs nor works with anyone else is exempt from that part. Where the FCA’s financial crime rules apply, a firm other than a sole trader with no employees must appoint an MLRO.
Does an MLRO need FCA approval?
In an FCA-regulated firm, yes: the MLRO holds SMF17, and SMF holders need FCA or PRA approval before starting. A business supervised only by HMRC or a professional body appoints its MLRO without FCA approval, though it must tell its supervisor.
What is the difference between an MLRO and a nominated officer?
The nominated officer is the legal term in the Money Laundering Regulations and the Proceeds of Crime Act for the person who receives staff disclosures and reports to the NCA. MLRO is the FCA’s term and the common job title. One person can hold both.
Can an MLRO be part-time or outsourced?
The role can be held part-time, but in an FCA firm it must be held by an approved individual with enough authority and access, and the FCA expects the MLRO to be based in the United Kingdom. See fractional MLRO roles.
What qualifications does an MLRO need?
None is required by law. The ICA Diploma in Anti Money Laundering is the common benchmark, and experience in compliance, financial crime, audit or law is usual. See MLRO jobs for the routes in.
How do I hire an MLRO?
Work out which supervisor applies, whether the appointment needs FCA approval, how many days a week the work takes and whether the gap is permanent or temporary. We send a shortlist of 3–5, each with pay or day rate, availability and IR35 position set out; see fractional MLRO for part-week hires.
