One of my main arenas of AML activity is Guernsey, and life there is pretty exciting at the moment with the imminent arrival of new AML legislation and guidance – both already published and coming into force on 31 March 2019. There’s plenty of meat on those particular bones but what I want to discuss today is the unveiling of the new Guernsey MLCO. *Anorak alert: this post is for the nit-pickers amongst you.*
In the planning stages, there was talk of rebranding the MLRO in Guernsey as a FCRO – Financial Crime Reporting Officer. I was against this development for various reasons (no-one else will know what it means; it would be an alarming development for officers who would find themselves held legally responsible for knowing about all financial crimes and not just money laundering and terrorist financing; and it’s a bugger for me to say during training sessions) and thankfully the whole idea was dropped somewhere in the drafting process. Instead, the new set-up in Guernsey will be this: firms (now known as “specified businesses”) will be required to have a Money Laundering Compliance Officer, an MLRO and a Nominated Officer.
Now, it’s not a bad arrangement – and indeed the MLCO/MLRO double act has been used successfully for years in Jersey. In short, the MLCO (and I’m quoting here from the shiny new Handbook on Countering Financial Crime and Terrorist Financing) “is to have responsibility for the firm’s compliance with its policies, procedures and controls to forestall, prevent and detect money laundering and terrorist financing”, while the MLRO (and this is from the legislation) is “nominated by a specified business to receive disclosures”. And the Nominated Officer will “carry out the functions of the MLRO in that officer’s absence”. The MLCO and the MLRO can be the same person, but obviously the MLRO and the NO cannot. In short (Venn diagrams at the ready) you can have:
- Three people: MLCO, MLRO and NO
- Two people: MLCO/MLRO and NO
- Two people: MLCO/NO and MLRO
My only small niggle with the new arrangement is that the Guernsey NO is not the same as NOs in other countries. Under the UK’s Money Laundering Regulations 2017, for instance, the nominated officer is “a person who is nominated to receive disclosures” – i.e. it’s the actual legal term for the disclosing bit of the MLRO’s job. (In the UK we don’t have an MLCO at all – the person who’s called the MLRO generally does the nominated officer stuff plus what Guernsey’s MLCO would do.) And if you’re confused now, well, that’s my point: for firms operating across jurisdictions, it’s tricky when different job titles are used for the same work or – more dangerously for whoever has the title – the same title is used for different legal responsibilities. Why didn’t Guernsey go for “deputy MLRO” rather than the more loaded Nominated Officer title? Ah, the mysteries of legislators…
I hate money laundering 
There is an important difference between NO and Deputy MLRO. A Deputy MLRO has constant responsibility, whereas an NO only has responsibility when the MLRO is absent. This caused an issue with our Jersey office, we had an NO there for one of our entities where I, in Guernsey, was the MLRO. The NO assumed it was just another name for a Deputy MLRO and processed a SAR when I wasn’t absent, causing a breach of the regulations.
There is a Deputy MLRO title in Guernsey but it isn’t prescribed and only large organisations would need one.
So it’s good that Guernsey didn’t confuse NO with Deputy MLRO but they should have created a new name for NO that made it more clear what they are, like Substitute MLRO.
Ah, that makes sense – the difference between NO and Deputy MLRO in Guernsey. I must admit I had always thought that Deputy MLRO did the MLRO’s job only when the MLRO was away, whereas someone with constant responsibility for some aspect of the MLRO role would be an Assistant MLRO… Goodness, it’s fraught with danger! I guess the lesson is for anyone holding any of these roles to be absolutely certain that they know the extent and limits of their role, irrespective of title.
As a comment from the ‘other’ Island there is an argument that you shouldn’t have had a NO in your jersey office as it is a meaningless title in Jersey and is not recognised in the Jersey AML/CFT handbook. Your definition of the Deputy MLRO role is spot on, the Deputy acts as and for the MLRO in his/her absence and his/her work is to be overseen by the MLRO or to put it another way the MLRO is ultimately responsible for vetting, approving and correcting (if necessary) the work of the Deputy MLRO.
In the instance you mention the Jersey Deputy MLRO would (depending upon the relationship) have been with in their rights to process the SAR in their Jersey MLRO’s absence………….afterall the bible does state that your Jersey MLRO must be Jersey resident! Still despite our differences we do seem to be moving closer together.