An analysis of the extrinsic factors that hinder the role of the MLRO

Abstract

The purpose of this study is to understand what factors hinder the role of the MLRO. Financial crime has become a major issue in today’s world and so the role of the MLRO continues to evolve and expand exponentially, especially with new regulations coming into force frequently. The main goal of this research is therefore to identify any factors which on a day to day basis hinder the role of the MLRO, to raise awareness so these can be avoided, thus facilitating the work done by MLROs which in turn should reduce the risk of financial crime. The literature review goes into detail on various extrinsic factors that may hinder the role of the MLRO, such as lack of knowledge, internal politics, perception of the compliance department from other teams, regular updates to laws and regulations etc. It has been noted that there is a gap in the literature, mainly due to the lack of studies done locally and also the perception of MLRO’s own perception of things. Data for this study was collected via anonymous interviews administered online, which were sent to MLROs via email, following their consent. The author received detailed, valid repsonses from 12 participants. Once the data was collected it was analysed using thematic analysis and eight themes emerged. This study found that two main factors that influence the MLRO’s role are lack of knowledge and pressure which is caused by the regulators and laws pertaining to anti-money laundering. The fight against financial crime continues everyday and as time goes by criminals are finding new ways to commit financial crimes. It is thus very important that people are trained and are aware of how financial crime can be reduced and the implications that such crimes cause, not only to the subject persons but also to the economy as a whole. By raising awareness and providing training, not only to employees of subject persons, but also to society in general, the role of the MLRO is made simpler. From the analysis that was conducted throughout this study, the main findings were that MLROs are mostly affected by the lack of knowledge about the subject, as well as pressure caused by the authorities. Due to this the author provides recommendations for future studies which aims at further understanding these factors in more detail. Such studies include a quantitative analysis on different employees, excluding compliance personnel, to understand their level of knowledge, as well as what they think compliance is. Another study can be done on regulators to understand why such pressure is caused and whether they are aware of it. These studies will help in making the role of the MLRO less onerous.