Fractional MLRO

Fractional MLRO for FCA-Regulated Firms

Exec Capital places fractional MLROs — individuals holding SMF17 FCA approval — into FCA-regulated firms that require a named, approved Money Laundering Reporting Officer but whose financial crime volumes and regulatory complexity do not justify a full-time appointment. The fractional MLRO fulfils the same personal regulatory function as a permanent SMF17 holder: they are the firm’s nominated officer under the Proceeds of Crime Act 2002, the individual who receives internal suspicious activity reports, decides whether to submit to the National Crime Agency, and is personally accountable to the Board for the firm’s AML and CTF framework. The engagement is structured around days per week rather than a full-time contract — but the regulatory accountability is identical.

If you are a smaller regulated firm that needs a credible, approved MLRO without the cost of a permanent senior hire, or a firm that needs fractional MLRO cover while a permanent appointment works through the FCA approval process, we are happy to discuss your situation directly. Every mandate is led personally by Adrian Lawrence FCA.

Which firms need a fractional MLRO

The fractional MLRO model is most commonly the right answer for three types of regulated firm. First, smaller Core firms — typically those below £30m in revenue or with limited retail financial crime exposure — where the volume of suspicious activity reporting and the complexity of the AML framework support two to three days per week of MLRO input rather than a full-time hire. Payment firms operating in narrow segments, smaller wealth managers, and boutique investment firms frequently fall into this category.

Second, firms in the FCA authorisation process that need to name an SMF17 holder as part of their permissions application but are not yet generating sufficient revenue to justify a permanent appointment at the seniority the FCA expects. The fractional MLRO bridges this gap — a credible, approved individual who provides genuine oversight of the developing financial crime framework while the firm establishes its operating volume.

Third, firms running a permanent SMF17 appointment process where the outgoing MLRO has left and the permanent successor has not yet received FCA approval. The fractional arrangement provides approved regulatory coverage during the gap, avoiding the position of having no named SMF17 holder in place. This is distinct from an interim appointment in that the individual may continue on a portfolio basis after the permanent successor is approved, providing continuity support during onboarding.

What a fractional MLRO does

A fractional MLRO performs the same substantive functions as a permanent SMF17 holder, structured around the engagement days agreed. In practice this means: acting as the firm’s nominated officer and receiving all internal suspicious activity reports raised by staff; making SAR submission decisions to the National Crime Agency within the required timeframes; overseeing the firm’s transaction monitoring programme and reviewing alerts; maintaining the firm’s AML policies and procedures in line with the JMLSG guidance and the FCA’s expectations; delivering the annual MLRO report to the Board; and managing any FCA interaction on AML matters.

The fractional model requires clear protocols between the MLRO and the firm’s operational staff to ensure that time-sensitive SAR decisions — which under the Proceeds of Crime Act 2002 must be made within a defined consent window — can be escalated and decided regardless of the MLRO’s scheduled engagement days. We advise on the design of these protocols as part of the placement to ensure the arrangement is operationally robust as well as regulatorily compliant.

The fractional MLRO is registered with the FCA as the firm’s SMF17 holder. The FCA does not distinguish between full-time and fractional SMF17 holders in terms of the personal accountability that attaches to the designation — the individual is accountable for the firm’s AML framework in full, regardless of how many days per week they are engaged.

The regulatory position

The FCA’s SMCR framework does not prohibit part-time or portfolio SMF17 holders. The FCA’s expectation is that the individual named in the SMF17 function has sufficient time and resource to fulfil the responsibilities allocated to them in the firm’s Statement of Responsibilities. The regulator’s assessment in any review or enforcement action will focus on whether the MLRO’s availability was demonstrably sufficient for the volume and complexity of the firm’s financial crime activity — not on whether the individual was engaged full-time.

This means the fractional arrangement must be properly designed from the outset. The engagement days must reflect the firm’s actual financial crime volumes, the MLRO’s responsibilities must be clearly documented in the Statement of Responsibilities and the firm’s AML policy framework, and the escalation protocols for time-sensitive SAR decisions must be robust. A fractional MLRO arrangement that is poorly structured is not a cost-saving — it is a regulatory risk. We build the governance framework around each placement rather than treating the engagement as simply a staffing transaction.

For the FCA’s published guidance on the MLRO function and the SMCR framework, see the FCA’s Form A application guidance.

The candidate pool

The pool of experienced, FCA-approved MLROs who are genuinely available for portfolio and fractional work is small and not publicly visible. Most are individuals who have held permanent SMF17 roles at regulated firms and have chosen to move to a portfolio model — either because the variety suits them or because the fractional market compensates them comparably to a single permanent role across their portfolio of engagements. They are not advertising their availability on job boards.

Finding the right fractional MLRO for a specific firm requires understanding which approved individuals are genuinely open to portfolio work, which sectors their experience covers, and whether their current portfolio has capacity for an additional engagement. This is a network access problem, not a search volume problem. Exec Capital’s direct relationships with experienced MLROs operating in the fractional market is the core of what we bring to a fractional placement — alongside the ability to structure the engagement correctly so that it works for both the firm and the individual.

Engagement structures and fees

Fractional MLRO arrangements are typically structured on a retained days-per-month basis, with a defined minimum engagement and a clear scope of responsibilities agreed upfront. Day rates for experienced, FCA-approved SMF17 holders operating in the fractional market reflect the personal liability exposure the role carries and the scarcity of the approved candidate pool — typically in the range of £800–£1,500 per day depending on seniority, sector, and firm complexity. Annual cost for a two-day-per-week fractional MLRO is broadly comparable to a mid-level compliance manager salary, while delivering SMF-level regulatory accountability and FCA approval.

Exec Capital charges a placement fee for fractional MLRO introductions rather than an ongoing margin on the individual’s day rate. This aligns our incentive with finding the right individual for the long term rather than maximising the billing rate of the individual we place.

Working with Exec Capital on a fractional MLRO placement

Every fractional MLRO placement is led personally by Adrian Lawrence FCA. The combination of network access to approved SMF17 holders who are genuinely open to portfolio work, regulatory understanding of how to structure the engagement correctly, and direct experience of the FCA’s expectations for the function means that our approach to fractional MLRO placements is substantively different from a standard compliance staffing exercise.

We begin each fractional MLRO mandate with a structured conversation about the firm’s permission set, its AML framework maturity, its financial crime volumes, and the engagement structure that would be appropriate. This frequently takes thirty minutes and immediately clarifies whether a fractional model is genuinely viable for the firm or whether the compliance complexity warrants a permanent appointment. There is no charge for this initial conversation.

For the permanent SMF17 appointment, see our MLRO Recruitment (SMF17) page. For the compliance function that frequently sits alongside the MLRO at smaller firms, see our SMF16 Head of Compliance Recruitment page. For the broader fractional compliance model, see our Fractional Compliance Officer page.

Further reading

For the permanent MLRO appointment, see our SMF17 MLRO Recruitment page and SMF17 MLRO hiring guide. For the compliance function that typically sits alongside or combines with the MLRO at Core firms, see our SMF16 Head of Compliance Recruitment page.

For the broader SMF framework, see our SMF Roles guide. For the FCA’s SMCR overview and the JMLSG guidance that defines the standard the MLRO is expected to implement, see the FCA’s SMCR overview and the Joint Money Laundering Steering Group guidance.