Reporting lines – direct or stoppers?

When friends come to visit us in Cambridge, I always warn them to get the fancifully-named Cambridge Cruiser trains – the non-stop ones – rather than the more leisurely stopping service which takes in the delights of Harlow Town, Elsenham and Audley End.  The benefits of the Cruiser are manifold: it’s quicker, it’s more relaxing, and you know exactly where you are at all times (if you’ve stopped, you’re in Cambridge).

I have always considered this analogous to suspicion reporting lines within regulated institutions.  If you have a suspicion, you should report it directly to your MLRO – and not take in the scenic detours via your line manager, department head, branch manager or anyone else.  It is an exception to almost everything else you might do, which has a strict hierarchy of decision-making.  But at a recent presentation someone questioned this – and not for the first time.  The MLRO would be overwhelmed, they contended, and so it is only right that the line manager (in this case) should cast an eye over every suspicion to weed out the ones that are being made only because of the inexperience or ignorance of the reporting individual.  It was a persuasive argument, but one that I fear lacks the comfort of supporting legislation.  As I see it, no-one except the nominated officer and his approved deputies has the right under money laundering legislation to filter suspicion reports in this way.  And if it all goes pear-shaped, it is the nominated officer who will be held responsible – even if it was someone else what done it.

I have always been fond of my Cambridge Cruiser reporting analogy, but what do you think?  Are most of you requiring staff to report directly to the MLRO, or is the stopping service much more common than I imagine?  And how do those manning the intermediate stops along the way – and indeed the ultimately-responsible nominated officer – feel about their exposure under the legislation?

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3 Responses to Reporting lines – direct or stoppers?

  1. Paul Coleman says:

    Hello Susan, An interesting analogy. I have a similar dilemma in my organisation in that I am sure that many “uncomfortable” feelings or concerns of say junior tellers, are referred to the immediate supervisor for guidance. I have tried to counter that by making myself available to all staff to come and discuss with me. I also emphasise in training sessions that if, after discussion with their supervisor, they still feel suspicious, or even just uncomfortable, they must feel free to report to me as MLRO. Given your thoughts above I am not so sure now that this is sufficient. Nice theory of encouraging junior staff to use the fast train but I am unsure of the practice on the basis that I don’t know what I don’t know. We also have a further control of the review of transactions the following day (I work in a retail bank) and which because of our size is done by myself. That should identfiy further possible suspicious activity, – but and now here’s a question back to you – is the teller still on the hook if a transaction is proven later to suspicious and I had reviewed it in my transaction review and chosen not to report.

  2. This is certainly a question that is raised regularly by MLROs. I can quite understand why staff would feel more comfortable discussing their worries with their familiar manager rather than going to see someone who might be a stranger and a member of senior staff. But I think it is important to encourage them to discuss concerns with whomever they wish but as soon as the word “suspicion” starts hovering, they should turn their thoughts to the MLRO.

    As for your question about the teller, as I understand it the teller’s legal duty to report suspicion is discharged once he has reported to his MLRO in accordance with his firm’s internal procedures. What the MLRO then does with that disclosure is now his responsibility – and the teller cannot be held in any way liable. So if someone reports to you and you decide not to disclose, that’s your business alone. If it later turns out that the suspicion was “right” (i.e. it was money laundering), then no doubt you will be asked to show your reasoning behind the decision not to disclose. There will be no come-back on the teller, and I also doubt that – unless your reasoning is shown to be deeply flawed or (more commonly) inadequately researched – there would be any criticism of you as MLRO.

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