In this post, we will delve into the difference between MLRO (Money Laundering Reporting Officer) and Compliance Officer roles. While both play crucial roles in ensuring regulatory compliance and preventing money laundering, they have distinct responsibilities and areas of focus. We will explore their varying scopes of duties, reporting lines, qualifications, relationships with regulators, and training requirements.
MLRO
MLRO stands for Money Laundering Reporting Officer, who is a compliance professional responsible for ensuring the firm or the institution is practicing effective systems and controls for the prevention of Money Laundering and Terrorist Financing. Also, he ensures that any suspicious activity is reported to the relevant authorities. MLRO is also responsible for advising and providing guidance to the staff and training them for detecting fraud and money laundering.
Compliance Officer
On the other hand, a Compliance Officer is also a compliance professional but with a different role where he is responsible to ensure that the firm or institution is fully compliant to all the relevant regulations and laws against money laundering and terrorist financing. A compliance officer ensures that the industry’s best practices are in place while performing financial operations.
Similarities in Roles of MLRO and Compliance Officer
Both the roles of MLRO and a Compliance Officer overlap in duties to some extent. Their core Job Responsibilities might be the same, as both ensure the regulatory compliance to prevent Money Laundering and Terrorist Financing. However, MLRO is more focused towards Anti-Money Laundering efforts, whereas the Compliance Officer who is also known as AMLCO (Anti-Money Laundering Compliance Officer) has a broad spectrum of duties related to compliance. Organizations also have a practice of hiring one person on both roles to save resources and cut costs. But it depends on the scope of the organization where they can have different resources for each role to increase efficiency in the compliance system.
Factor wise Difference Between MLRO vs AMLCO
Scope of Duties:
MLRO: As stated earlier, the MLRO is responsible for ensuring an institution’s effectiveness in AML process and control in compliance systems. It also ensures full AML controls.
AMLCO: is responsible for the overall compliance with the applicable and relevant regulations and laws pertinent to Money Laundering and Terrorism Financing.
Reporting Line:
MLRO: MLRO reports to the Board of Directors mostly. Sometimes he may be reportable to Senior Executives, but it depends upon the hierarchy and type of the organization’s managerial structure.
Compliance Officer: He may be reportable to more than one management body, as he has to ensure overall compliance. So, AMLCO may report to the MLRO or another senior executive or the Chief Risk Officer.
Qualifications:
MLRO may require to have specific knowledge and specialization in AML and terrorist financing. It includes certification from accredited bodies like ACAMS and other necessary qualifications.
Compliance Officer may require a bachelor’s degree as a bare minimum but no specific degree is required to become a compliance officer. A more general understanding of regulatory compliance is required here.
Relationship with Regulators:
MLRO can be the first line of contact for regulators in AML matters.
AMLCO has a broader engagement and a range of links with regulators.
Training
MLRO is responsible to provide training for AML
AMLCO is responsible for training employees for overall compliance.
Conclusion
The core difference between MLRO and Compliance Officer is the scope of duties and job roles. MLRO performs specific duties that are restricted to the area of Money Laundering. A compliance officer or AMLCO works on a much broader set of duties for ensuring the overall compliance. It is important to note that both these compliance professionals are an important part of regulatory circle and have a sensitive role in mitigating money laundering and financial crime.
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