Even the most dedicated and determined MLRO needs a break from his work occasionally, and as he packs his flip-flops/salopettes* and the latest thriller/romance/colouring-in book* [* delete as appropriate] he can relax knowing that all is being left in the capable hands of his deputy MLRO. Or at least that’s the theory.
To be fair, no (or rare) mention of a deputy MLRO is made is in the underlying legislation: in the UK, the Money Laundering Regulations 2007 talk of a “nominated officer” who will receive disclosures, but do not stipulate what should happen while he is sipping a mint julep on a beach in the Caribbean. The guidance – in this case, the guidance produced by the Joint Money Laundering Steering Group – is much more forthcoming on the matter. “In larger firms,” Part I of the guidance suggests in paragraph 3.15, “because of their size and complexity, the appointment of one or more permanent Deputy MLROs of suitable seniority may be necessary. In such circumstances, the principal, or group MLRO needs to ensure that roles and responsibilities within the group are clearly defined, so that staff of all business areas know exactly who they must report suspicions to.” The wording clearly indicates that the principal MLRO and his phalanx of deputies should all be of senior rank, and that are all capable of receiving reports of suspicion in the role of nominated officer. This position is supported by my other go-to source, the AML Handbook issued by the Guernsey Financial Services Commission, which, when specifying in section 2.4 the required credentials for an MLRO, lumps together “the MLRO and any deputy MLROs that are appointed” so that all are subject to the same list of requirements. “Deputy MLRO” is the accepted term, but perhaps “lieutenant MLRO” would have been a better title, as the intention is that the deputy is capable of taking the place of the MLRO, and thereby assuming his duties and (crucially) his legal responsibilities.
(An entirely different creature is the assistant MLRO. As the name suggests, the assistant MLRO helps the MLRO with some aspects of his role. The concept of the MLRO delegating some of his duties is entirely accepted and probably expected, but – and here’s the fly in the proverbial – he cannot delegate his responsibilities to an assistant. As the JMLSG guidance puts it: “Where AML/CTF tasks are delegated by a firm’s MLRO, the Financial Conduct Authority [the UK financial regulator] will expect the MLRO to take ultimate managerial responsibility.”)
I have met a few deputy MLROs – thankfully not many, but enough to prompt this post – who do not quite grasp the extent of their potential exposure. They imagine that for the fortnight or so that the MLRO is recharging his batteries on that beach, they will be fielding a few emails and making sure that any reports of suspicion are filed carefully for his attention on his return. Not so: for all intents and purposes (or perhaps, for all prosecutions and convictions…) the deputy MLRO is the MLRO for that period. And so any sensible deputy MLRO will insist on having the same level of training as the MLRO, and will try to keep in the AML loop as much as possible, so that when his turn comes, he will not drop the baton.