Payment and e-money institutions sit in an odd position when it comes to the MLRO. Most are authorised under the Payment Services Regulations or the Electronic Money Regulations rather than the Financial Services and Markets Act, so the Senior Managers regime and its SMF17 function do not apply to them. Yet the MLRO at a payments firm is often under more regulatory scrutiny than the MLRO at a small investment firm that does hold SMF17.
This article explains why, what the role involves at a payments or e-money firm, and what to look for when you hire one.
The regulatory basis for the role
Payment and e-money institutions are within the Money Laundering Regulations 2017. Those regulations require a firm to appoint a nominated officer to receive internal reports of suspected money laundering and decide whether to report to the National Crime Agency, and, where appropriate to the firm’s size and nature, a member of the board or senior management responsible for compliance with the regulations. At most payments firms, both roles sit with the MLRO.
The FCA assesses the MLRO as part of the firm’s authorisation application, and it continues to scrutinise the role through supervision. It is not a Senior Manager Function, so there is no Form A approval, but in practice the regulator looks closely at who holds it, and a weak MLRO can delay an application or prompt supervisory attention. SMF Capital’s page on SMF recruitment for payments and fintech explains where the Senior Managers regime does and does not reach in this sector.
The personal stakes are the same as anywhere else in the regulated sector. Under the Proceeds of Crime Act 2002, a nominated officer who fails to make a required disclosure can commit an offence in their own right. Experienced candidates know this, and they will want to understand your controls before they accept the role.
Why payments MLROs face more pressure
Volume and speed
Payments firms move large numbers of transactions quickly, often in real time. Transaction monitoring generates alerts at a scale most small investment or insurance firms never see. The MLRO has to design a monitoring approach that catches what matters without drowning the team in false positives, and then stand behind the decisions it produces.
Fraud and money laundering overlap
At a payments firm, fraud and money laundering are hard to separate. Authorised push payment fraud, money mule activity and account takeover all generate both fraud losses and money laundering risk. Since the Payment Systems Regulator’s mandatory reimbursement requirements for authorised push payment fraud came into force in October 2024, the commercial cost of weak controls has risen sharply too. The MLRO needs to work closely with the fraud team, and at smaller firms often leads both.
Agents, distributors and partners
Many payments firms rely on agents, e-money distributors, programme managers or embedded finance partners. The MLRO has to make sure those relationships are properly risk-assessed and overseen, because the firm remains responsible for the financial crime risk they introduce.
Sanctions
Cross-border payment flows bring real sanctions exposure, and the consequences of a breach can be severe. The MLRO, or a sanctions lead reporting to them, needs to own screening, alert handling and the response to new designations. SMF Capital’s guide to hiring a sanctions lead covers when that becomes a separate role.
Safeguarding scrutiny
Safeguarding is not an MLRO responsibility, but it shapes the regulatory climate the MLRO works in. The FCA’s PS25/12 safeguarding reforms, in force from 7 May 2026, introduced daily reconciliations, monthly safeguarding returns, annual safeguarding audits for most firms, and resolution packs. Firms under that level of scrutiny rarely get a light-touch review of their financial crime controls at the same time. The safeguarding work itself usually sits with finance; our sister practice Accountancy Capital recruits the qualified finance and regulatory reporting professionals who run it, and FD Capital places the finance directors who oversee it.
What the role covers
At a typical payment or e-money institution, the MLRO is responsible for:
- The business-wide risk assessment and the policies and procedures that follow from it. SMF Capital’s guide to the business-wide risk assessment sets out what a good one contains.
- Customer due diligence and enhanced due diligence standards, including for business customers and their beneficial owners. See SMF Capital’s guide to customer and enhanced due diligence.
- Transaction monitoring design, tuning and governance
- Receiving internal reports and deciding on suspicious activity reports, including requests for a defence against money laundering. FD Capital’s article on DAML requests in practice explains how that works day to day.
- Sanctions screening and the firm’s response to sanctions alerts
- Oversight of agents, distributors and partners from a financial crime perspective
- Training, management information and the annual MLRO report to the board
- The firm’s relationship with the FCA and the NCA on financial crime matters
Full-time, fractional or interim?
The right model depends on the firm’s stage and scale.
| Firm stage | Typical MLRO model |
|---|---|
| Preparing for authorisation | Fractional MLRO, two to three days a week, helping build the framework and named in the application |
| Small authorised firm, low volumes | Fractional MLRO, one to two days a week, often combined with compliance |
| Scaling firm with growing volumes or agents | Full-time MLRO, with analysts and a deputy |
| Firm under remediation or regulatory review | Interim MLRO with remediation experience, alongside a permanent search |
A fractional MLRO can work well at an early-stage firm, but the FCA will want to see that the individual genuinely has the time, authority and resources to do the job. SMF Capital’s page on fractional MLRO recruitment explains how those appointments are structured, and FD Capital’s article on outsourcing the MLRO function sets out where the model succeeds and where it fails.
As a firm grows, the MLRO needs a team around them. SMF Capital’s guide to sizing the financial crime team at a payments or e-money firm covers the analysts, investigators and deputy roles that follow, and its financial crime leadership recruitment service fills them.
What to look for in a payments MLRO
Many MLRO candidates have strong financial crime experience from banks, wealth managers or insurers. Fewer have run the role at a payments firm, where the risks move faster and the data is different. When we run a payments MLRO search, we test for:
Payments-specific risk experience
Have they handled money mule networks, authorised push payment fraud, card or merchant risk, or high-volume cross-border flows? Can they describe typologies they have actually seen, not just ones in guidance?
Monitoring and data fluency
A payments MLRO does not need to be a data scientist, but they must understand how monitoring rules and models work, how to tune them, and how to explain their effectiveness to the board and the regulator.
Judgement under volume
Ask candidates how they triage alerts and reports when volumes spike, how they document decisions, and how they handled a case where the business wanted to keep a customer they had doubts about.
Ability to build
Early-stage firms need an MLRO who can write the framework, not just maintain one. Look for candidates who have taken a firm through authorisation or rebuilt controls after a review. SMF Capital’s authorisation support service is built for firms at that stage.
Standing with the regulator
Although payments MLROs are not SMF holders, the FCA still forms a view of them. Candidates with a clean regulatory history and strong references are worth more. SMF Capital applies the same fit and proper discipline to payments MLRO searches as it does to SMF17 roles.
FD Capital’s guide to the essential skills for an MLRO has more on the competencies that matter across sectors.
When the firm also needs Senior Managers
Some payments firms hold FSMA permissions as well, for example for consumer credit or investment activity, which brings them within the Senior Managers regime. At that point the MLRO role becomes SMF17 and needs FCA approval, and the firm will need other Senior Managers too. SMF Capital’s guide to MLRO recruitment (SMF17) covers the approval process, and its combined compliance officer and MLRO page explains how smaller firms structure the two roles together.
For executive hires around the MLRO, such as a chief operating officer or chief risk officer, our sister practice Exec Capital runs executive search for FCA-regulated firms, and NED Capital finds the non-executives who provide board oversight of financial crime.
What payments MLROs cost
Experienced fractional MLROs typically charge between £600 and £1,100 a day, and permanent MLRO salaries commonly sit between £90,000 and £150,000, according to FD Capital’s MLRO salary analysis. Payments and e-money MLROs with strong fraud and monitoring experience tend to sit in the upper half of those ranges, because demand from the sector is high and the candidate pool is relatively small.
The bottom line
A payments or e-money firm’s MLRO may not hold a Senior Manager Function, but the role carries the same personal exposure and, in practice, more regulatory attention than many SMF17 appointments. Hire someone who has managed payments-specific risk, can build as well as maintain, and has the standing to challenge the business. If your current MLRO has left, SMF Capital’s interim MLRO and urgent replacement services can provide cover while the permanent search runs.
