Financial Conduct Authority (FCA) UK Regulation Sample Exam

Who has the initial responsibility to report suspected money laundering activity?

1. The compliance officer

2. You, to report to the Money Laundering Reporting Office

3. The client

4. Your supervisor

The correct answer is: You, to report to the Money Laundering Reporting Office

The correct response emphasizes that the individual aware of suspected money laundering activities has the immediate obligation to report such activities. This is often articulated within regulations surrounding anti-money laundering (AML) compliance, particularly under the Proceeds of Crime Act 2002 and the Money Laundering Regulations in the UK. In practice, when an employee or an individual in a regulated sector identifies any signs of potential money laundering, they must take it upon themselves to report this to the Money Laundering Reporting Office (MLRO). This is vital in ensuring that relevant authorities can investigate and take appropriate action to mitigate risks associated with financial crime. The responsibility for reporting lies with the individual, showcasing a proactive compliance culture within financial institutions. Thus, timely and accurate reporting to the MLRO is critical in the fight against money laundering, as it allows for effective monitoring and potential intervention by law enforcement. Other options, while related to the AML framework, do not specify the immediate duty upon identifying suspicious activities. For instance, a compliance officer or supervisor may play a significant role in establishing protocols and ensuring that reports are managed correctly, but they are not the ones initially responsible to report unless they personally witness or are made aware of the suspicious activities. Similarly, the client typically does not have the