What should the MLRO report contain?
What should the MLRO report contain?
The AML compliance officer plays a pivotal role in assisting businesses in being AML compliant. The Money Laundering Reporting Officer (MLRO) has to submit MLRO report semi-annually and is a crucial element in the AML compliance process, ensuring that the companies adhere to the Anti-Money Laundering and Combatting Financing of Terrorism (AML-CFT) requirements. The MLRO report facilitates the desk-based supervision of companies understanding their AML compliance structure and knowing whether they are continuously complying with the AML laws
Mandatory submission of the MLRO report
Cabinet Decision No 10 of 2019 states that the MLRO reports should be submitted twice a year to the senior management. A copy of the MLRO report is sent to the concerned supervisory authority. The officer will review all the internal policies and procedures to ensure adherence to the AML rules and regulations. The officer evaluates the efficiency of the companies in AML compliance and the extent to which they are following the procedures. The MLRO also guides the companies to sync with the AML policies and strengthen the AML compliance program.
Contents of the MLRO's Report
The compliance officer should highlight the glaring gap between the current and existing AML laws compliance requirements. The report should focus on the required remedial measures that the company must follow to be AML compliant.
Essential Elements in the MLRO report
Review of the size and the quality of the Suspicious Activity Reports (SAR) submitted by the employees and the number of SARs submitted. The MLRO report should mention the number of clients rejected due to the absence or insufficient information.
The existing AML –CFT training components- the number of courses and the training imparted to the employees and any issues concerning the AML training. The evidence of the training imparted and the company’s competence in adhering to the AML/ CFT laws should be part of the MLRO report
- The report should also mention if the company needs any resources to stay AML/ CFT compliant.
- Mention the sample review of the Customer Due Diligence (CDD) file ensuring the information is updated and holds relevance.
- Verify the risk ratings and relevance and updation of the risk assessment report.
- Evaluating the company’s relevance of the AML compliance process- AML/ CFT policies, procedures, and documentation.
Controls to be Highlighted in the MLRO Report
The MLRO will check the following compliances.
- AML-CFT control program.
- CDD/ KYC, EDD for a thorough customer risk assessment.
- Supervision of senior management for implementing the AML-CFT program
- Business-related risk assessment.
- AML/ CFT program’s continuous monitoring.
- STR reporting.
Key focus areas in the MLRO's report
The MLRO report should focus on the AML/ CFT process compliance. The report should confirm that the company has utilised and applied the general risk assessment results. The report should include the corrective measures that correspond to the inadequacies of the existing AML/ CFT compliance program.
The recommendations should guide the company to improve the AML/ CFT compliance program and help them achieve 100% AML compliance. A deadline has to be provided, and the AML compliance recommendations, as mentioned in the MLRO report, should be followed. The companies should be monitored as to whether they follow the rules and adhere to the deadline.
Submission of the MLRO Report
Banks, insurance companies, etc., must submit the MLRO report to the Central Bank of UAE (CBUAE). The DNFBPs – Designated Non-Financial Businesses and Professions (DNFBPs must submit the MLRO report to the Ministry of Economy (MoE).
Regulated entities that have mandatory compliance with the AML/ CT laws need to follow the AML compliance process diligently. Appointment of an MLRO and submission of report is compulsory. The MLRO report should let the authorities know the shortcomings of the AML/ CFT program of the company. It should also highlight the inefficiency in the AML training, which makes the AML compliance program weak and ineffective.
Businesses should hire an AML consultant with their core expertise in AML services. The consultant will provide the correct guidance in preparing robust AML training for your employees, help in selecting the right AML software, and assist in the appointment of an MLRO.
AML UAE has a vast team of professionals with core expertise in In-house AML compliance and allied services. Get access to various services such as AML/ CFT Policy Controls and Procedures Documentation, in-house AML compliance department set up, AML software selection, Annual AML/ CFT Risk Assessment Report. It also provides AML training services and AML/ CFT Health checks. Mitigate risks and stay AML compliant by following the process carefully.
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The responsibilities of MLRO are:
- Ensure compliance of daily operations with the company’s AML policies
- Be the point of communication between the company and its employees as well as the company and federal authority
- Make suspicious transaction reports
- Acting in compliance with UAE’s guidelines, notifications, rules, and regulations
- Respond if the concerned authority requests any document
MLRO means Money Laundering Reporting Officer in AML.
The MLRO must submit the MLRO report to the senior management of the company. They must forward a copy to the Central Bank of UAE (CBUAE) in the case of financial institutions and the Ministry of Economy (MOE) in the case of DNFBPs.
About the Author
CISA, FCA, CS, DISA (ICAI), FAFP (ICAI)
Pathik is a multi-disciplinary professional with more than 22 years of experience in compliance, risk management, accounting, system audits, IT consultancy, and digital marketing. He has extensive knowledge of Anti-Money Laundering rules and regulations, and he helps companies comply with legal requirements. Pathik also helps companies generate value from their IT investments.