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A New Role for 2018 - The MLCO

We are now all familiar with the roles of COLP, COFA and MLRO.  There is however a new role to be appointed for 2018 the Money Laundering Compliance Officer – MLCO.

This appointment is required (where appropriate with regard to their size and nature) by the vast majority of solicitors firms with the possible limited exception in some cases of a true “Sole Practitioner” with no other employees.

Under Regulation 21 of the new 2017 Money Laundering Regulations the firm must appoint

“one individual who is a member of the board of directors (or if there is no board, of its equivalent management body) or of its senior management as the officer responsible for the relevant person’s compliance with these Regulations;

This assumes of course that your firm has a “management body” which meets regularly with a management agenda and records minutes/actions arising from those meetings.

This role is in addition to the MLRO role. It is possible for the same Director, Partner or Senior Manager to be both MLRO and MLCO.  A non-solicitor however, unless already approved as an Officer by the SRA, is likely to need to go through an SRA vetting process including a Disclosure Barring Service (DBS) check (formerly known as CRB Check).

The SRA will be contacting all firms in January 2018 requiring them to complete a questionnaire to gather information on Compliance with new Regulations. This will include a question about the identity of your MLCO.

You should therefore appoint an MLCO as early as possible in the New Year.

We would also remind you of the requirement under the new Regulation 18 to carry out a Practice-Wide Risk Assessment:

1)    A relevant person must take appropriate steps to identify and assess the risks of money laundering and terrorist financing to which its business is subject.
 2)    In carrying out the risk assessment required under paragraph (1), a relevant person must take into account: -

  1. information made available to them by the supervisory authority under regulations 17(9) and 47, and
  2. risk factors including factors relating to: -
  3. its customers;
  4. the countries or geographic areas in which it operates;
  5. its products or services;
  6. its transactions; and
  7. its delivery channels.

3)    In deciding what steps are appropriate under paragraph (1), the relevant person must take into account the size and nature of its business.

4)    A relevant person must keep an up-to-date record in writing of all the steps it has taken under paragraph (1), unless its supervisory authority notifies it in writing that such a record is not required.