Tips and Strategies for MLROs to Enhance AML Processes

Are you an MLRO (Money laundering Reporting Officer) who wants to combat the evolving challenges of financial crimes while staying compliant with the latest AML (Anti-Money Laundering) compliance?

AML compliance is more than just ticking a document’s requirements boxes. It’s all about making the processes efficient and more successful by reducing risk and optimizing resources.

“Efficiency is doing things right; effectiveness is doing the right things.”

– Peter Drucker.

This article focuses on AML processes and optimization strategies explicitly introduced for MLROs, from acquiring the latest skills to evolving developments using the following measures.

Let’s explore how your compliance team may modify your AML operations to fulfill the regulatory requirement and improve your company’s security. Are you excited to learn how you may enhance your AML strategy to accomplish robust compliance?

What Happened to David Brian Price?

David Brian Price, a compliance officer was found to be recently involved in a significant regulatory case.

The Financial Conduct Authority (FCA) imposed a substantial financial penalty, prohibition order, and withdrawal of approvals on him.

Price, who was a former executive director and Money Laundering Reporting Officer (MLRO) at CFP Management Ltd, faced these actions due to serious failings in his role.

The FCA found that he benefited financially from a flawed pension transfer model, failed to act with integrity, and exhibited recklessness in his duties.

Can a MLRO lose his way?

In the latest Announcement, David Brian Price, a former executive director since 2011, an MLRO, and a Customer Representative, has been experienced in the pensions industry for 30 years and has faced severe financial penalties, restrictions, and withdrawals of approvals at CFP Management Ltd by the Financial Conduct Authority (FCA).

“There is an abundance of guidance for firms on how to comply with AML and financial crime requirements and no excuse for failing to follow it. The FCA will not hesitate to take action against firms and senior individuals who fall short of our standards. As in this case, such action may include using our powers to restrict a firm’s continuing business.” said Mark Steward, Director of Market Oversight and Enforcement.

Lesson from Sonali Bank Scandal

Sonali Bank’s MLRO was penalized in 2016 with a £17,900 fine for breaking principles 3 and 11.

• Principle 3 emphasizes that a company should take proper measures to control and arrange its affairs responsibly and efficiently with an appropriate risk management system.
• Principle 11 suggests that organizations interact honestly and constructively with their authorities and reveal the necessary information to the FCA so that they can handle the matter.

Apart from that, the Former MLRO of Sonali Bank was unable to fulfill the requirements, such as

• Creating an AML screening system
• Finding significant gaps in operational regulation
• Fixing Weak training
• Addressing internal auditors’ issues
• And persuading senior management that further resources are required

What could be done to avoid being subject to penalties? Here’s what needs to be considered.

Can you imagine the person responsible for safeguarding the system breaking the rules and regulations?

An MLRO is the backbone of your AML compliance and safety while providing a genuine map of your company’s existing measures to combat financial crimes.

The recent legal implications on compliance officers makes every existing MLRO think constructively about complying with AML procedures and regulations. This sends a strong message to all the people in the finance department, especially high-ranked people.

In the case of Mr. Price,  the compliance team failed in integrity and risk assessment.

Price was supposed to oversee a risky business model but gained profits through it. Violating rules makes the client suffer, as the individuals appointed to senior positions must act with integrity to avoid questions about the company’s image.

Serious questions arise after these scenarios, how far reaching could be the implication of penalties?

Here’s a breakdown of all the implications imposed in this case.

• Imposed fine

The Authority delivers a framework of five stages to set the suitable amount of monetary sanctions for issues that occurred on or after 6 March 2010.

“The Authority decided to penalize Mr Price with £632,594 under Section 66 of the Financial Services and Markets Act 2000 (FSMA)” for violating Principle 1 to emphasize the importance of MLRO following the rules for the system’s integrity.

Are monetary fines thought to be a powerful repellent? Do they genuinely change behavior, or do they just serve as a temporary hurdle? Let’s find out what experts think of it.

• Prohibition Sentence

According to section 56 of the FSMA, Mr. Price is prohibited from performing any duty or action like authorized, regulated bodies and dealing with any exempt person or professional organization.

Usually, a banning order can affect a person’s career, reputation, and professional reliability. Still, lawful sentences safeguard the integrity of financial systems by ensuring that those who breach the trust and rules no longer do further damage.

• Withdrawal of approvals

In support of section 63 of the act, Withdrawing the permit from Mr. Price to perform actions of senior management roles of Executive Director (SMF 3) and Money Laundering Reporting Officer (SMF 17) at the organization (CFP Management Ltd).

The preceding sections set examples to explain how a financial firm can play a role in your future security. Here’s what can be done to prevent hefty implications.

Read more about Top challenges faced by MLROS in today’s age.

How the Case Further Progressed?

During his supervision, Mr. Price showed ignorant behavior and could not comply with decided legal requirements. His actions resulted in messed-up cases where complete information was absent.

The Authority examined 21 reports and discovered that 18 were not complied with, and 14 files contained shortcomings, highlighting the integrity issue. The consequences of pension specialists’ ignored behaviour misled the authorities by ignoring clients’ objectives.

The defective model benefited CFPs and introducers, as each transfer added considerable value. Mr. Price received an enormous profit of £439,302. However, the firm penalized Mr. Price with  £632,594 and disqualified him from financial regulatory bodies.

See, that’s how tables have turned from getting profits to penalized?

The careless behavior of Mr. Price affected 1947 cases, indicating the importance of the integrity of financial advice, following instructions, and perfect oversight in every procedure offered by firms, especially pension transfer.

Are you confident when dealing with your financial advisor and trusting his abilities?

Examine your compliance team’s performance if they follow rules and regulations and that is working in your favor. Ask questions, educate yourself, and secure your future from possible issues.

How Can an AML Watcher Help?

Have you ever considered streamlining your duties as a Money Laundering Reporting Officer (MLRO)? AML Watcher might help you enhance your efficiency. It scans large amounts of data and can detect suspicious activity quickly.

AML Watcher serves user-friendly dashboards and reports that detect possible threats, save time, and ensure no unusual activity goes unnoticed with a guarantee. AML Watcher keeps you compliant by automatically upgrading its algorithms and measures.

MLROs can make informed decisions immediately and confidently using tools that provide useful insights and detect issues. AML Watcher lessens the manual workload by automating compliance checks, creating detailed reports, and letting MLROS focus on planning methodology.

MLROs can increase their verification methods by availing of AML Watcher’s data analysis and pattern identification services to detect and review suspicious behavior. Contact us to increase productivity and manage the compliance risks effectively.