https://www.fca.org.uk/firms/approved-persons/heads-compliance-mlro-applicant-competency-capability

Authorised and registered firms should have heads of compliance and money laundering reporting officers (MLROs) who are suitably competent and capable of effectively performing the roles. Firms should carefully consider how individuals can demonstrate this ahead of seeking regulatory approval.

Heads of compliance and MLROs are important roles within financial services firms and many firms are required to have an FCA-approved senior management function (SMF) holder eg, SMF16 and SMF17. They will need necessary skills and knowledge, from training and experience, to be effective. The level of those skills and knowledge should be in line with the size of the firm and its risk of harm.

The following, based on our experience of approved applications, should help firms decide if an individual candidate is suitable.

Training

Most successful applicants have:

• Already completed relevant training courses before applying to us for approval. We are less likely to accept individuals who intend to complete necessary courses after approval.
• Attended training courses tailored or relevant to the type of business the firm they propose to work for.
• Attended recent and up-to-date training to provide relevant knowledge of the current regulatory rules and expectations. Where training happened several years ago, we may ask if the candidate has supplemented their training with recent continuous professional development (CPD) courses.
• Attended training courses with sufficient length and depth to gain knowledge to carry out the role. Very short ‘introductory’ training courses, alone, do not provide sufficient coverage or depth to be useful for a head of compliance or MLRO, even in the smallest firms.

We do not endorse or recommend any courses or training providers, or prescribe the form training should take, whether that’s classroom-based courses, e-learning or course books/materials. However, we have found courses with an examination or assessment are better in demonstrating that an individual has gained relevant knowledge.

Experience

While relevant experience to demonstrate competency and capability may come in many forms, we note that:

• Individual applicants do not need to have held head of compliance and MLRO positions before to be successful. Successful applicants may have held more junior compliance roles in the past, such as compliance manager or deputy MLRO.
• Previously holding the same or similar approved positions is a good demonstration that someone may be suitable for these roles but does not mean an applicant will be automatically approved.
• Successful applications for heads of compliance and MLROs have a range of backgrounds and experience, including in compliance and legal teams, lawyers, accountants, and consultants. The experience of an applicant who has only previously worked in a front-line role (and in the absence of other training or experience) is often insufficient to demonstrate that they have the necessary skills and knowledge to establish and operate a compliance function.
• In some smaller firms, it may be appropriate and proportionate for the owner and/or chief executive to hold these functions themselves. However, we still expect those individuals to have relevant training and experience to ensure their business will comply with the relevant rules and regulations for their firm.

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