A Guidance for ML Reporting Officers in the Financial Services Sector

As a part of this remit, the MFSA is also responsible for scrutinising and approving licence holder’s key function holders. As such, the MFSA remains steadfast in upholding high standards for both its licence holders and anyone holding prominent roles within licence holder’s control frameworks – this includes Money Laundering Reporting Officers (‘MLROs’).

The MFSA’s priority to protect and maintain the safety and integrity of the financial services sector also falls in line with national strategic priorities. Financial crimes such as money laundering and the funding of terrorism (‘ML/FT’) present a tangible threat to the stability of the financial services sector. This reality drives the MFSA’s prioritisation of ensuring that individuals intending to take on an MLRO position are equipped with the necessary knowledge and expertise. Nevertheless, the MFSA’s oversight over MLROs does not cease once an individual is approved. The MFSA, through the implementation of its 2019 AML/CFT Strategy, further considers financial crime related matters throughout the supervisory lifecycle of its licence holders.

Given their role, MLROs also fall within the remit of the MFSA’s supervisory interactions as it has to ensure that anyone appointed to the said role continues to have the necessary knowledge, expertise and resources to contrast ever evolving threats in this area. It is important to bear in mind that the Prevention of Money Laundering and Funding of Terrorism Regulations (‘PMLFTR’), as further elaborated upon by the Implementing Procedures issued by the Financial Intelligence Analysis Unit (‘FIAU’), contains detailed binding provisions on the measures and procedures to be maintained and applied by authorised firms. This is also the case with regards to the MLRO, with the work carried out by the MFSA complementing that of the FIAU in ensuring the effectiveness of this key control function.

Licence Holders being unable to control their financial crime related risks via adequate controls (noting that the MLRO is a prominent control in this regard) would leave the financial services industry, its operators, their customers, and the jurisdiction in general vulnerable to the adverse consequences of financial crime. As such, this publication strives to provide guidance to prospective MLROs, incumbent MLROs, and the regulated firms MLROs operate within on governance practices that can facilitate their effective compliance and ultimately complement the financial services sector’s efforts towards fighting financial crime and in particular ML/FT.

The guidance provided here is motivated and educated by financial crime compliancerelated supervisory interactions conducted across the period 2021 to 2023 across all sectors within the financial industry.