Joint Money Laundering Steering Group (JMLSG) Consultation
TLT picks out the key points you shouldn't miss...
What’s this about?
In November 2025, the Joint Money Laundering Steering Group (JMLSG) launched a consultation on proposed updates to Part 1, Chapter 3 of its guidance. The changes aim to clarify the responsibilities and expectations of Money Laundering Reporting Officers (MLROs) within regulated firms. If adopted, the revised provisions are expected to take effect six months after publication. The consultation closes on 14 January 2026, so its important for regulated firms to consider the implications now.
Our Financial Services Risk and Compliance Partner, Ben Cooper says:
“The proposed draft changes to the JMLSG confirm what many advising MLROs have stressed in recent times: MLROs should be exercising independence in their duties as SMF holders and implementing a holistic approach to management of financial crime risks”.
The points not to miss...
The MLRO role is now explicitly designated as a Senior Management Function under section 59 Financial Services and Markets Act 2000. This means any individual appointed as MLRO must be approved by the FCA before taking up the role. This change reinforces the MLRO’s accountability and aligns with the FCA’s focus on individual responsibility at the highest level.
The amendments require firms to clearly document the MLRO’s responsibilities and ensure the individual has sufficient seniority within the organisation. The MLRO must be able to coordinate AML/CTF risk management across all business areas and have direct access to senior management and the board.
While the MLRO can delegate certain duties, ultimate responsibility remains with the FCA-approved individual. Larger or more complex firms are encouraged to appoint permanent deputy MLROs of suitable seniority, with clearly defined and documented roles. For temporary absences, a deputy can act for up to four weeks without FCA approval; longer absences require formal approval.
The MLRO must ensure effective monitoring of AML/CTF systems across the firm and group entities, including overseas branches and subsidiaries where relevant to the UK regulatory system. The amendments emphasise the need for independent internal audit functions to assess the adequacy and effectiveness of AML/CTF controls, make recommendations, and monitor compliance with those recommendations. The MLRO is responsible for ensuring that monitoring processes are robust, findings are followed up promptly, and resources are adequate.
Where group entities operate in different jurisdictions, the MLRO must ensure that AML/CTF policies and procedures are consistently applied where relevant to the UK regulatory system, subject to local legal restrictions. This means that, while group-wide standards should be aligned with UK requirements, the MLRO must also recognise and address any local barriers to implementation, ensuring that UK regulatory expectations are met wherever possible.
Implication of proposed changes for regulated firms
Greater emphasis has been placed on the importance of the role of MLROs in regulated firms by highlighting their independence and the territorial scope of their oversight.
The draft text changes do not suggest wide-reaching reforms; rather MLROs in regulated firms will already be carrying out their role in line with the expectations outlined in the proposed changes i.e. with independence, authority and a broadminded approach to management of emerging financial crime risks.
Considerations for regulated firms
Firms should pay specific attention to the addition of draft wording “effective” (in the context of monitoring processes) and “relevant to the UK regulatory system”.
In our view, the inclusion of “effective” reiterates the need for monitoring processes to be demonstrably effective (i.e. actively capturing and mitigating AML/CTF risks identified) rather than a merely formative approach of having processes in place for cursory review from regulatory supervisors.
Further, “relevant to UK regulatory system” is likely to be considered an attempt to recast the role of MLROs to consider activities and events which occur outside the UK but (indirectly or directly) have an impact on a firm’s risk management in their UK based operations. Either way, it is clear the changes highlight that MLROs are expected to play a more pivotal role in a regulated firm’s risk management processes and that nuance should be applied when considering how this role is carried out.
At a glance...
Authors: Ben Cooper and Sam Omozusi
This publication is intended for general guidance and represents our understanding of the relevant law and practice as at December 2025. Specific advice should be sought for specific cases. For more information see our terms & conditions.
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