The Wolfsberg Group shot to prominence in October 2000 with the release of a well-publicized set of global AML guidelines for the private banking sector. The rationale for the initiative, which followed a series of scandals involving high-net-worth individuals and politically exposed persons or PEPs, was the avoidance of further money laundering within the private banking sector. The initiative was launched with the cooperation and assistance of Transparency International.
The Wolfsberg Group
The Wolfsberg Group comprises various private banking institutions. The Wolfsberg Group has no official status and its standards are not binding, even on its members, but its statements of good practice have received international recognition throughout the financial sector, indeed to the point of being used by Regulators to benchmark good and poor practice.
The Wolfsberg standards consist of the various sets of AML Principles and related Statements issued by the Group since its inception, which are considered as best practices, and measures to be adopted by the organizations, such as financial institutions.
Some of the sets of AML Principles and related statements are mentioned below:
Wolfsberg AML Principles on Private Banking
Wolfsberg Statement on the Suppression of the Financing of Terrorism
Wolfsberg Statement on Monitoring, Screening, and Searching
Wolfsberg Statement – Anti-Money Laundering Guidance for Mutual Funds and Other Pooled Investment Vehicles
Wolfsberg Statement – Guidance on a Risk-Based Approach for Managing Money Laundering Risks
The Wolfsberg Statement against Corruption
Wolfsberg Group, Notification for Correspondent Bank Customers
Wolfsberg AML Guidance on Credit/Charge Card Issuing and Merchant Acquiring Activities
Wolfsberg Statement on AML Screening, Monitoring, and Searching
Wolfsberg Anti-Corruption Guidance
Wolfsberg Guidance on Prepaid and Stored Value Cards
The continuous threat of money laundering is most effectively managed by understanding the potential and emerging ML risks, which are associated with the customers and the products, which an organization deals with. The goal of Wolfsberg is to assist the organizations in managing the ML risks and to endeavor to prevent the use of a financial system of the organization by criminals. The Wolfsberg emphasis is also on the money laundering risk assessment to improve financial crime risk management through identifying the general and specific money laundering risks an organization faces.
Determining how these ML risks are mitigated by the organization’s AML program, undertaking an enterprise-wide AML compliance risk assessment may be a complex task but a necessary one to understand an organization’s compliance culture.
The periodicity of the compliance risk assessment depends upon several factors including the methodology employed, the type and extent of interim validation/verification that is undertaken, the results of the risk assessment, as well as internal or external risk events. An appropriate assessment of ML risks results in the application of appropriate due diligence when entering into a business relationship with the prospective customer.
Final Thoughts
The Wolfsberg Group believes that a reasonable risk-based approach, adopted by the organizations to assess the ML risks including the Country risk, Customer risk, and Services risk, results in the implementation of the relevant compliance controls, to effectively manage ML risks. Further, organizations are required to design and implement appropriate AML measures to mitigate the potential ML risks, associated with high-risk category customers, such as politically exposed persons (PEPs). Wolfsberg emphasizes the performance of enhanced due diligence in cases of high-risk scenarios and customers.
