So as an MLCO, you have many obligations in the Handbook, one of these is to ensure oversight over your MLRO and evidence the test. So with the newness of the role, there are limited real-world published tests. Given that Jersey has had the MLCO role for many years, there are some practical findings. However, what it does not indicate is the appetite for enforcement against this prescribed position. My feeling is the Board remains fairly and squarely in the crosshairs. Also if you are reading this you have already made the choice not to be the first.
On 21st February the JFSC release a themed examination on the Role of the Money Laundering Reporting Officer, so with these findings, I have turned them into something the Guernsey MLCO needs to include in a test of the robustness of the MLRO function and the Internal SAR procedures.
These findings are something in which smaller businesses or low-risk businesses are commonly challenged, mainly as they have so few SARs, testing feels like guesswork. So here are a few guiding points arising from the thematic, which I would recommend building into a formal test and have the Board feel the comfort of some decent control assurance.
As with most regulatory risks it is key to identify and evidence the thought process at that point, and throughout the life of the SAR. In this instance, it on reaching reasonable grounds of suspicion and this in effect triggers (for my Guernsey audience) the Criminal Justice (Proceeds of Crime)(Bailiwick of Guernsey) Law 2007 and the Disclosures (Bailiwick of Guernsey) Law, 2007.
However, whilst the law is always designed as a straight-line process. The reality is far more complicated. Over the years, and many disclosures later. I can reflect on the fact that many internal reports have been far from a straight line, slam dunk, disclosure and done.
So any process that you develop should consider evidencing, the mind of the MLRO at each step. In my time, I have received internal reports, where you can't see a properly framed suspicion. They comprise of bits of this and that, then you are told, "well altogether it looks suspicious, doesn't it ?".
Obviously, training needs I hear you shout, yes I agree. But did the MLRO record that they couldn't identify a predicate offence? If they didn't, they couldn't stop the 'as soon as reasonably practicable' clock.
I have put together a testing script that is available here for download so watch this space. Or even better contact me for a consultation.
All the best,