What are the responsibilities of an Anti-Money Laundering Compliance Officer (AMLCO) and Money Laundering Reporting Officer (MLRO)?

Posted by Andrew Borowiec on Nov 14, 2018 11:27:00 AM


Are you about to be appointed AMLCO or MLRO and want to know what is expected of you? Or perhaps you’re a due diligence professional who wants to understand what to look for when investigating the AML compliance of a potential fund. This article outlines the responsibilities of the Anti-Money Laundering Compliance Officer and the Money Laundering Reporting Officer and will take a look at some of the areas that are open to interpretation.

The requirement for an AMLCO and MLRO

The Cayman Islands changed their anti-money laundering legislation in September 2017, requiring a named natural person to be appointed as the Anti-Money Laundering Compliance Officer, Money Laundering Reporting Officer and Deputy Money Laundering Reporting Officer, effective September 2018.

This is now a legal requirement for all Relevant Financial Business, including registered and unregulated funds (hedge funds exempt from registration with CIMA), private equity, and investment managers.

These appointed persons should be of appropriate seniority, experience, authority and accessibility, among other things. To learn more about who should occupy the role of AMLCO, you can read our previous article on the topic.

The responsibilities of an AMLCO

The first key duty of the Anti-Money Laundering Compliance Officer (AMLCO) is that they function as the point of contact with competent authorities and are responsible for the compliance program of the Relevant Financial Business (RFB).

  • This means that they are accessible to the regulators who may wish to contact a real human to discuss reported issues. It also means they are the single point of contact for filing internal reports referred to them by staff at the fund administrator.

  • There is also a requirement to ensure that appropriate checks and measures are in place to ensure compliance, the primary aspect of this being a regular audit.

  • Finally, the AMLCO must ensure that the measures set out in the regulations are adopted by the relevant financial business.

How will they do this?

  • The AMLCO has access to the Board and unfettered access to all files associated with their fund, allowing them to provide comprehensive oversight of compliance.

  • They will verify that a set of policies and procedures is produced, approved by the Board and implemented. They don’t have to create these policies themselves, just ensure they exist, are up to date and implemented correctly. These policies and procedures set out the responsibilities of the AMLCO, MLRO and DMLRO, plus reporting lines. They should also cover:

    • Risk models and management for persons, countries and activities

    • Identification, verification and record keeping

    • Audit and other management tools

  • The frequency of audits is a point where there is some disagreement and different firms are taking different approaches for different reasons. Broadly speaking your options are:

    • Whenever a Board meeting happens (usually twice or three times a year)

    • Annually according to a set schedule

    • Using a risk assessment to rate the risk profile of a fund and let the outcome of this dictate how often an audit needs to be done.

The responsibilities of a MLRO and DMLRO

The roles of a Money Laundering Reporting Officer (MLRO) and a Deputy MLRO are broadly similar, varying only in seniority:

  • The MLRO + DMLRO are responsible for identifying and reporting money laundering to the competent authorities

  • They must maintain record of all SAR and non-SAR reports within the structure

  • They should also consider and investigate all internal SAR reports received for the service provider of the piece of RFB (i.e. the fund)

  • Like the AMLCO, these individuals must have unfettered access to the relevant documentation in order to perform their function.

If you’ve enjoyed this article, why not check out the workshop recording that inspired it? In just 20 minutes, you’ll learn everything you need to know about the new legislation, what the responsibilities of the AMLCO, MLRO and DMLRO are and what criteria you should use when appointing them. Click on the button below.

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Tags: Anti-Money Laundering (AML), Money Laundering Reporting Officer (MLRO)

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