Internal reporting of suspicious transactions is an essential element of the AML compliance program. The MLRO must ensure that all employees are aware of their responsibilities to report any suspicious transactions or activities. This includes providing training to staff on how to recognize suspicious transactions and what steps to take if they suspect such activity.
The money laundering reporting officer or MLRO must also ensure that there is a clear process in place for employees to report suspicious transactions or activities. The process should be straightforward and easy to use, and it should provide employees with the confidence to report without fear of reprisals.
The compliance investigation team and MLRO are responsible to perform appropriate transaction investigations and ensure that facts and detail are shared with the senior management, including the Compliance Committee, for review and necessary feedback.
Internal Reporting of Suspicious Transactions by MLRO
In an institution, internal reporting takes different forms and involves different hierarchies. Initially, the investigation report is prepared by the compliance investigation team, which is first shared with MLRO for his or her review. After the review of the MLRO, the report is shared with the Compliance Head for review and feedback.
The compliance Head being the secretary to the Compliance Committee must ensure that the investigation report is prepared with facts and figures. Compliance Committee is headed by the Chief Compliance Officer, and key departmental heads become the members of the committee. The members meet periodically to discuss significant and key compliance issues and matters.
After ensuring the reasonableness of the investigation report, the compliance head presents the report to the members of the Compliance Committee for review and discussion on the significant compliance matters and money laundering and terrorist financing incidents encountered in the transaction. Compliance Committee performs a detailed review and provides necessary feedback to the department heads and the compliance head.
Final Thoughts
The internal reporting of suspicious transactions is a critical element of the AML compliance program. The MLRO plays a vital role in ensuring that the company has adequate controls and procedures in place to prevent, detect, and report money laundering activities. The MLRO must ensure that all employees are aware of their responsibilities to report suspicious transactions, and there is a clear process in place for employees to do so. The MLRO must also conduct an investigation into any reported suspicious transactions and file a SAR with the relevant authorities if necessary. By following these procedures, the MLRO can help to protect the company from the risks of money laundering and maintain its reputation and integrity.
