Financial Crime World

Money Laundering Reporting Officers Face Insufficient Support and Resources

A recent study by the Malta Financial Services Authority (MFSA) has revealed a disturbing trend of Money Laundering Reporting Officers (MLROs) in the financial services sector lacking sufficient support, resources, and knowledge to effectively carry out their duties.

Lack of Knowledge on Anti-Money Laundering (AML) and Combating the Financing of Terrorism (CFT)

According to the study, a significant number of individuals applying for MLRO positions showed a lack of basic knowledge on AML and CFT. This lack of understanding was evident in:

  • 85% of interviewees in 2021
  • 65% in 2022
  • 55% in 2023

Awareness of Business or Sector-Specific Risks

The study found that many MLROs were not aware of their business or sector-specific risks, with only:

  • 1% of interviewees exhibiting sufficient knowledge on this topic

Knowledge of Internal Processes and Systems

Additionally, the majority of MLROs (60%) lacked sufficient knowledge on internal processes and systems relevant to their function.

“One-Man Shows” and Conflict of Interest

The study also highlighted a concerning trend of “one-man shows,” where MLROs are expected to handle multiple roles simultaneously, leading to a weak compliance culture. This phenomenon was observed in:

  • 2 instances in 2021
  • 3 in 2022
  • 2 in 2023

Conflict of interest was another issue identified by the study, with:

  • 9 instances reported in 2021
  • 4 in 2022
  • 1 in 2023

Recommendations and Next Steps

The MFSA’s findings suggest that MLROs are not receiving sufficient support and resources to carry out their duties effectively. To address this issue, the authority is calling for further training and guidance to be provided to MLROs to ensure they have the necessary knowledge and expertise to identify and report suspicious transactions.

“We are committed to ensuring that MLROs have the tools and resources they need to combat money laundering and terrorist financing,” said a spokesperson for the MFSA. “We will continue to monitor this situation closely and take action as necessary to protect the integrity of our financial system.”

Implications and Next Steps

The study’s findings have significant implications for the financial services sector, highlighting the need for improved training and support for MLROs to prevent financial crimes and maintain public trust in the industry.