Compliance Officer and MLRO Recruitment Across The Capital Recruitment Group

Of all the senior appointments a regulated firm makes, two come up more often than any other: the compliance officer and the money laundering reporting officer. Under the Senior Managers and Certification Regime these are the SMF16 and SMF17 functions. Almost every FCA-regulated firm within the regime needs someone approved to hold each one, and the regulator looks at both appointments closely.

Across The Capital Recruitment Group, these searches are led by SMF Capital, the group’s specialist brand for FCA and PRA-regulated Senior Manager appointments. This article explains why we built a dedicated brand for this work, the three ways firms usually fill these roles, and how the other brands in the group support a compliance or financial crime hire.

Why a Specialist Brand for Senior Manager Hiring

The group began with FD Capital, recruiting finance directors and CFOs, and grew into Exec Capital for C-suite and board appointments, NED Capital for non-executive directors and governance roles, and Accountancy Capital for qualified finance professionals below director level.

Many of the firms we work with are regulated, and over time it became clear that regulated appointments are a discipline of their own. A compliance officer or MLRO isn’t just a senior hire. They need regulatory approval before they can start, they carry personal accountability under the Senior Manager Conduct Rules and the Duty of Responsibility, and the firm must be able to show the regulator why they are the right person. Running those searches well depends on understanding the regime as much as the market.

SMF Capital brings that work together in one place, with guides to every Senior Manager Function and service pages for the roles firms ask about most. For the compliance and financial crime roles, that means three distinct services, covering the three ways firms usually structure the work.

Route One: A Dedicated Compliance Officer (SMF16)

The SMF16 holder is accountable for the firm’s compliance function. In practice that means owning a risk-based compliance monitoring plan, keeping policies current, overseeing financial promotions and complaints, leading the firm’s response to regulatory change and reporting to the board. At retail firms, the Consumer Duty now takes up a large share of the role, and the best compliance officers can show the board evidence of good customer outcomes rather than just a clean monitoring log.

Firms tend to appoint a dedicated compliance officer once their conduct risk is significant enough to justify one person’s full attention: larger advice and wealth firms, lenders, insurers, investment firms and anyone with a large retail customer base. The candidates firms want combine previous approval or substantial formal deputising, real experience in the firm’s sector, and the confidence to challenge senior colleagues.

SMF Capital’s page on compliance officer recruitment (SMF16) covers what the regulator expects of the role and how the search is run.

Route Two: A Dedicated MLRO (SMF17)

The SMF17 holder is accountable for the firm’s anti-money laundering systems and controls and usually acts as the nominated officer, deciding whether suspicions must be reported to the National Crime Agency. The role covers the business-wide risk assessment, customer due diligence standards, transaction monitoring oversight, sanctions and the annual MLRO report to the board.

A dedicated MLRO is usually needed where financial crime risk is high: payments and e-money firms, cryptoasset businesses, private banks and wealth managers with international clients, and any firm handling large transaction volumes. Sector experience matters even more here than for compliance officers, because money laundering and fraud typologies differ so widely. A payments MLRO who understands authorised push payment fraud and a crypto MLRO who understands blockchain analytics and the travel rule are very different hires.

SMF Capital’s page on MLRO recruitment (SMF17) sets out the role and the experience firms prioritise in each sector.

Route Three: One Person for Both (SMF16 and SMF17)

For many smaller and mid-sized firms, the most sensible structure is one experienced person holding both functions. It’s common among directly authorised advice firms, brokers, smaller wealth managers, consumer credit firms and firms applying for authorisation. It is proportionate, it costs less than two senior appointments, and it gives the board a single accountable individual for the whole regulatory picture.

It is also where hiring goes wrong most often. Most compliance professionals lean one way: some are conduct specialists with limited hands-on financial crime experience, others are financial crime specialists who have never run a compliance monitoring programme. A combined holder needs real depth in both, and the regulator will assess them against both functions.

A combined appointment usually works when:

• the firm’s conduct and financial crime risks are moderate;
• the person has held, or formally deputised for, both functions in a similar firm;
• they have enough time for both, whether full-time or one or two days a week on a fractional basis; and
• there is a clear plan for urgent decisions, such as a suspicious activity report, on days they aren’t working.

SMF Capital’s guide to recruiting one person as both compliance officer and MLRO includes a practical test for deciding whether to combine the roles and what to look for in a candidate.

Choosing the Right Route

The right answer also changes over time. A firm that starts with one combined holder will often split the roles as it grows, takes on higher-risk customers or moves from Core to Enhanced status. The warning signs are usually consistent: the combined holder working well beyond their agreed time, backlogs building in monitoring or customer reviews, or the board receiving less detail on one function than the other.

How the Group’s Brands Support a Compliance Hire

A compliance officer or MLRO appointment rarely happens in isolation, and this is where working across the group helps.

The board. Compliance officers and MLROs report to the board, and at many firms to a risk or audit committee chaired by a non-executive. Firms strengthening their oversight at the same time often appoint an independent chair or committee chair through NED Capital.

Finance. Regulatory reporting, capital adequacy and safeguarding all draw on the finance function. A firm hiring a compliance officer is often also hiring, or replacing, a CFO or finance director, which is FD Capital’s core work, and SMF Capital covers the chief finance function (SMF2) where the role needs approval.

The wider team. As firms grow, they add deputy MLROs, sanctions and investigations leads and heads of financial crime. SMF Capital’s financial crime leadership recruitment covers those roles, and Accountancy Capital supports the finance team beneath them.

Because the group’s networks are shared, a search for one role often surfaces strong candidates for another. Many of the senior people we know hold, or have held, more than one of these positions over their careers.

What Makes These Searches Different

Three things set compliance and financial crime appointments apart from most senior hires.

Approval comes first

Every SMF16 and SMF17 holder must be approved before they start. The regulator assesses candidates against its fit and proper standards of honesty, competence and financial soundness, and for a combined appointment it looks at both functions. We discuss previous approvals, regulatory references and anything that might come up in checks early and in confidence, before an offer is made rather than after. The FCA’s guidance on the Senior Managers and Certification Regime sets out the framework.

The candidate pool is narrow

Many people work in compliance and financial crime. Far fewer have held, or formally deputised for, a Senior Manager Function in a comparable firm. The strongest candidates are usually employed and not actively looking, so these searches depend on knowing who is out there rather than advertising and waiting.

Timing matters

Notice periods of three months are common, and the regulator’s decision time comes on top. Firms losing a compliance officer or MLRO often need interim or fractional cover while the permanent search runs. SMF Capital also covers interim MLRO and compliance officer appointments for exactly that situation.