MFSA issues Guidance for Money Laundering Reporting Officers
Observations gathered from a series of interviews and inspections
The Malta Financial Services Authority (MFSA) has issued its Guidance for Money Laundering Reporting Officers (MLROs) in the financial services sector.
It said the publication is motivated by and draws insights from observations related to Anti-Money Laundering/Countering the Financing of Terrorism (AML/CFT) practices and knowledge, among applicants and licence-holders. These observations were gathered from over 170 interviews conducted with applicants intended to fulfil MLRO functions, as part of the approval process, as well as 118 supervisory inspections of authorised entities across the entire financial services sector.
The MFSA’s Chief Officer Supervision, Christopher P. Buttigieg said: “MLROs fulfil one of the most important functions in AML/CFT and act as conduits between the financial services sector and us as regulators. We have a vested interest in providing the necessary guidance, not only to MLROs, but also to other key function holders that are ultimately in the best position to support them.”
The MFSA explained that financial crimes such as money laundering and the funding of terrorism present a tangible threat to the stability of the financial services sector. For this reason, it gives priority to ensuring that individuals intending to take on an MLRO position are equipped with the necessary knowledge and expertise.
In this guidance document, the MFSA highlights the common issues that it encounters while scrutinising proposed individuals for MLRO positions and approved MLROs, with particular attention to key themes, such as, their independence, autonomy, and accountability, conflicts of interest, their knowledge and expertise, the time that is dedicated to the role, as well as training and awareness.
Self-assessment questions are also included in the document as an additional resource for MLROs, and the regulated firms within which they operate, to be used as aids for establishing the appropriateness of their approach. These are coupled with examples of both good and bad practices.