In recent times, we have seen a major increase in electronic transactions in part due to Covid19 and the reduction in cash transactions, but also with the increase in Electronic Money Institutes (EMI’s) starting up which are disrupting the market. This increase in volume of traffic has made it more difficult to monitor and detect suspicious transactions, persons, and businesses for compliance officers, especially if they are still carrying out most of the checks manually.
- A few key statistics to help quantify this:
- Globally, in 2020, 2 – 5% of global GDP, or $800 billion – $2 trillion in current US dollars laundered.
- $12.01 billion in global fines and penalties related to AML, KYC, Data Privacy and MiFID breaches in 2020
- $3.90 Billion, largest fine issued in 2020 to Goldman Sachs for its role in helping to raise hundreds of millions for a sovereign wealth fund that was used as a personal piggy bank.
It is the responsibility of the Money Laundering Reporting Officer (MLRO) to take the correct action and reduce the risks.
The MLRO’s role is to be the independent authority within a company with oversight of all activity relating to anti money laundering. Not even the CEO can override their decision although this has been known to be done with severe consequences. Their role should always be of a senior level and in larger organisations, an independent role, however in some smaller organisations this role is given to the Head of AML or Compliance. The most important factor in the role of an MLRO is that they should be able to act freely on their own authority and be informed of any relevant knowledge or suspicions within the company. There should never be an attempt, either from internal or external sources, to place undue pressure on the MLRO or otherwise influence any decision with regards on how to proceed with respect to any suspicion of ML/FT. It is also their responsibility to pass any issues and file Suspicious Transaction Reports with the appropriate Financial Intelligence Unit or equivalent in country.
Anyone considering taking on the role of the MLRO should assess whether they possess the necessary qualities to carry out the role in an effective manner. They should be aware that where an MLRO contributes or causes an individual to be in breach of its AML/CFT obligations either through an act or omission, the individual in question may be subject to an administrative penalty in the form of a hefty fine. Anyone found to be complicit in money laundering could face a lengthy prison sentence. In recent regulatory updates, besides the MLRO being investigated and charged, other members of the company can also be charged if they are proven to have knowledge of the wrongdoing, with severe consequences including prison. In previous AMLDs the penalties were not so severe.
Key Responsibilities of a MLRO:
- Responsible for all processes and procedures concerning AML within the company.
- Responsible for redacting and maintaining the business risk assessment
- Understanding the services being offered by the company and by whom (owners of company) and the risks of certain events happening and then mitigating the risks.
- Keeping staff trained and up to date on all matters of compliance, making sure the internal processes and procedures are compliant with the latest regulations.
- Making sure the company has the resources available to check for AML/CTF be it with human resources or technology.
- Responsible for keeping up to date with the latest regulations set by the relevant authorities.
In today’s technological age there is no reason or excuse for a company not being able to spot ML/CTF activity. Whilst much depends on the set-up in place and it may take a long time to resolve the issue, the question of ‘not knowing’ is not a valid reason for allowing illicit activities to take place.
ComplyRadar is here to assist and help MLROs by checking all transactions in real time to reduce false positives and to flag any potential true positives based on machine learning and artificial intelligence. It also uses anomaly detection to spot unusual behaviour from a particular customer.
The fact that the MLRO has full visibility over the various teams within his/her remit including AML, Fraud and in the case of gaming companies, RG, allows for a seamless workflow, less room for error of omission and goal-setting for team members.
The enabled integration with 3rd party data and screening providers also allows for the MLRO to have all data displayed on one single user interface which provides ease of use and once again, makes it less likely for suspicious activity to slip through the cracks.
Combining AI and ML with human interaction, fraud detection, case management and responsible gaming plus our latest XML converter module to file SARs / STRs accurately with the local FIU and you have a full packaged solution for your business to succeed.
Reach out to us for additional information on ComplyRadar and how we can assist with your transaction monitoring requirements.