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Guidance provided by FCA appointing heads of compliance and MLROs

The FCA has recently issued guidance for authorised and registered firms regarding the roles of heads of compliance and money laundering reporting officers (MLROs).


Individuals who hold these positions within financial services firms need to demonstrate their skills, knowledge, experience and competency in order to perform them effectively.


The guidance, based on the FCA's experience of successful applications, includes the following:


Training:

Most successful applicants have already completed tailored or relevant training courses for the business they propose to work for before applying to the FCA for approval. Applicants should also attend training courses with sufficient length and depth to gain knowledge to carry out the role, as the regulator deems short or introductory courses provide insufficient coverage to be useful.


Experience:

Applicants can have a range of backgrounds and experience in compliance or legal teams, or could work as lawyers, accountants, and consultants. They may have also held more junior compliance roles in the past.


Support from Third Parties:

Applicant firms will sometimes need or intend to get additional compliance support from external advisors, lawyers or compliance consultants, to help with their application or the ongoing running of their compliance function. However, the individual who is accountable for the compliance and MLRO function should still have sufficient knowledge and experience to make relevant compliance decisions for their business.


Capacity:

Smaller firms can propose an individual to carry out either role on a part-time basis, and the FCA does accept these proposals in some cases, as long as the time commitment to the role is both proportionate and sufficient. If the proposed head of compliance or MLRO has another role within the firm or externally however the FCA will consider if there are any conflicts of interest.


It is important to note that whilst an individual may believe they have the required skillset and training to perform either role the FCA can still request an interview to furthers assess competency and capability.

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