In the current AML regulatory climate, the Financial Conduct Authority (FCA) has moved beyond asking if you have a risk assessment; they are now asking how live that data is. For a Money Laundering Reporting Officer (MLRO), the difference between a paper-based CMRA and a digital one is the difference between a historical artifact and a strategic shield.
The FCA’s expectations for oversight have shifted. They increasingly look for evidence of a holistic and dynamic approach to risk. Paper files, while once the industry standard, often fail to meet the “speed of thought” data requirements now expected during a supervisory visit or a Section 166 review.
Firms who use a paper CMRA such as the SRA template often use it as a snapshot in time. A digital CMRA is a living record. When a client’s circumstances change, such as a new corporate structure or a shift in geographic footprint, a digital system can automatically trigger a re-assessment, ensuring your risk profile remains accurate.
The FCA expects MLROs to identify thematic risks across the entire firm.
Paper: Requires manual tallying of hundreds of folders to see if you have an unhealthy concentration of high-risk issues such as jurisdictions.
Digital: Instant dashboards show real-time exposure, allowing the MLRO to report with confidence and precision.
The FCA is increasingly critical of “undocumented decision-making.” Digital platforms provide a time-stamped, immutable audit trail of why a risk level was changed, who approved it, and what evidence was reviewed, fulfilling the Senior Managers and Certification Regime (SM&CR) requirements for individual accountability.
During a routine visit, the FCA expects an MLRO to provide granular data “at speed.” A digital CMRA ensures you aren’t left searching through filing cabinets for the following key metrics:
| Data Category | What the MLRO needs to show | Why it matters to the FCA |
|---|---|---|
| Risk Concentration | % of clients by risk rating (Low/Med/High) across specific departments. | To ensure resources are allocated to the highest-risk areas. |
| Velocity of Change | How many CMRAs have been updated following a “trigger event” in the last 6 months. | Demonstrates that monitoring is ongoing, not just at onboarding. |
| Sanctions & PEP Hits | Real-time status of PEP/Sanctions matches and the rationale for “False Positive” dismissals. | Proves the firm is not just screening, but actively adjudicating. |
| Source of Wealth (SoW) | Visual proof of the narrative and evidence linked directly to the matter risk. | High-risk matters require deeper “intrusive” due diligence that must be easily retrievable. |
| Geographic Exposure | A heat map of matters linked to High-Risk Third Countries (HRTC) | To check alignment with the UK’s latest Sanctions and AML regulations. |
The FCA’s “Consumer Duty” and financial crime focus require a culture where risk assessment is integrated into the business, not sidelined in a compliance manual.
"Firms cannot just rely on close relationships with clients to develop an understanding of risk. They must have documented, evidence-based assessments that are regularly reviewed."— FCA Financial Crime Guide
By adopting a digital CMRA, your firm moves from a culture of “Did we fill in the form?” to “What is this data telling us about our risk today?” This proactive stance is exactly what the regulator looks for when determining the “effectiveness” of a firm’s AML framework