Role of the Money Laundering Reporting Officer (MLRO) – Part 2

by John McCarthy Consulting Ltd. | Dec 11, 2023 | Blog, News

In last week’s blog we looked at the overall responsibilities of the Money Laundering Reporting Officer

This week we look at the administrative aspects of the MLRO’s role.

STRs received

It is very important to keep a comprehensive record of all Suspicious Transaction Reports (STRs) received by the MLRO, including:

• the reasons, in writing, for decisions made as to whether the STR is sent to the Garda/Revenue or not.
• It is also strongly recommended that all verbal discussions and external professional and legal advice obtained regarding suspicions, are fully recorded.

Internal Quality Control

The guidance from the CCABI places considerable responsibility on the MLRO implementing and maintaining internal controls and risk management around Money Laundering and Terrorist Financing.

• As part of AML compliance, firms must carry out independent AML Compliance Reviews to assess the adequacy of their AML systems and controls;
• External reviews are not always necessary but hiring an external expert who carries out these reviews all the time will result in a more focused manner and will result in a much better compliance outcome for the firm. If the firm has the capacity, a partner or senior manager not involved with AML policies, controls and procedures could carry out the review, with sample checks each year;
• The MLRO should report formally to other partners and directors in writing every year on the effectiveness of the firm’s AML systems and controls.

Contents of the MLRO’s Annual Report

The MLRO’s report should include the following:

• Executive summary for the year highlighting any serious compliance deficiencies, together with details of the remedial action that has been taken;
• Review the number and quality of internal STRs and consider more focused training where none have been received;
• Number of external STRs submitted to the Garda/Revenue;
• Number of new clients declined because of unsatisfactory information;
• Details of staff training during the year –
  • number of AML courses;
  • details of new/existing staff attending;
  • issues/queries/misunderstandings clarified;
  • supporting evidence of AML training and proof of understandingg. documented quiz assessment results with supporting attendance certificates;
• Ensure that evidence is retained of the sample check of Client Due Diligence (CDD) files that were examined as part of the AML Compliance Review to ensure all information is relevant and up-to-date (e.g. identification is still valid, records match that of CRO and RBO websites, all ultimate beneficial owners (UBOs) and directors have been satisfactorily identified etc.);
• Sample check of clients’ AML risk assessments to ensure that existing risk ratings are still appropriate, relevant and up-to-date;
• Check that the AML Policies, Controls & Procedures Manual is up-to date;
• Check that the Firm-Wide Risk Assessment is current and up-to-date;
• Check that employees understand the role of ML and their individual responsibilities; and
• Ensure that recommendations from past internal/external inspections are fully implemented.

Please also go to our website to see our:

• Anti-Money Laundering Policies Controls & Procedures Manual (March 2022) – View the Table of Contents click here.
• AML webinar (March 2022) available here, which accompanies the AML Manual. It explains the current legal AML reporting position for accountancy firms and includes a quiz. Upon completion, you receive a CPD Certificate of attendance in your inbox.
• letters of engagement and similar templates. Please visit our site here where immediate downloads are available in Word format. A bulk discount is available for orders of five or more items if bought together.
• ISQM TOOLKIT or if you prefer to chat through the different audit risks and potential appropriate responses presented by this new standard, please contact John McCarthy FCA by e-mail at john@jmcc.ie.

We typically tailor ISQM training and brainstorming sessions to suit your firm’s unique requirements. The ISQM TOOLKIT 2022 is available to purchase here.

Role of the Money Laundering Reporting Officer (MLRO)

by John McCarthy Consulting Ltd. | Dec 2, 2023 | Blog, News

The term ‘MLRO’ is not mentioned in the legislation but at this stage has become well-established in practice. In this short series of blogs, we explore the role and responsibilities of the MLRO in an accountancy firm.

The MLRO is responsible for the following anti- money laundering (ML) tasks is an accounting firm:

1. Implementing and enforcing an appropriate risk-based approach;
2. Ensuring that the systems and controls in place are appropriate to manage the risks faced by the firm; and
3. Ensuring that the firm complies with the legislation and CCABI Guidance.

The MLRO must also:

1. Possess the knowledge, skills and understanding of the firm’s ML risks;
2. Complete, and periodically update, the Firm-Wide Risk Assessment (also known as the Business Wide Risk Assessment) under section 30A of the Criminal Justice (Money Laundering and Terrorist Financing) Acts 2010 to 2021 which outlines and provides an assessment of these risks;
3. Receive internal STRs (Suspicious Transaction Reports) from employees and Senior Management in the firm;
4. Make the ultimate decisions on behalf of the firm on whether these suspicions need to be reported externally to the Garda And Revenue;
5. Report to Garda And Revenue by completing and submitting an external STR on the GoAML system and subsequently with Revenue on ROS.

IT Controls Assessment

Auditors are reminded that there are relatively significant changes in the requirements of ISA 315 Identifying and Assessing the Risks of Material Misstatement for accounting periods commencing 15 December 2021, which in practical terms means, accounting periods Ended 21 December 2022 and later.

Auditors dealing with the audits of entities with such accounting periods affected by these change will need, to adopt new audit programmes and, in additional to the normal audit tests, to also assess the entity’s IT controls (no matter what the size of that entity).

This is a significant new development for auditors of SMEs, in particular, and will be a game changer ion the type of audit documentation and evidence of assessment of such IT controls by the auditor on audit files.

For an easy to implement additional (two page) IT Controls Questionnaire to help document the above process, please click on this link to download immediately for only €60 + VAT.

Please also go to our website to see our:

• Anti-Money Laundering Policies Controls & Procedures Manual (March 2022) – View the Table of Contents click here.
• AML webinar (March 2022) available here, which accompanies the AML Manual. It explains the current legal AML reporting position for accountancy firms and includes a quiz. Upon completion, you receive a CPD Certificate of attendance in your inbox.
• letters of engagement and similar templates. Please visit our site here where immediate downloads are available in Word format. A bulk discount is available for orders of five or more items if bought together.
• ISQM TOOLKIT or if you prefer to chat through the different audit risks and potential appropriate responses presented by this new standard, please contact John McCarthy FCA by e-mail at john@jmcc.ie.

We typically tailor ISQM training and brainstorming sessions to suit your firm’s unique requirements. The ISQM TOOLKIT 2022 is available to purchase here.