The Wolfsberg Group – Developing an Effective AML/CTF Programme

As of August 2020, Wolfsberg Group has released a statement encouraging authorities to adopt the FATF guidelines in accordance to mitigating the risk of AML (Anti-Money Laundering) and to implement appropriate measures in CTF (Combatting Terrorism Financing).

Wolfsberg Group has outlined the following key procedures to be undertaken:

• Complying with AML/CTF laws and regulations.
• Providing highly useful information to relevant government agencies in defined priority areas.
• Establishing a reasonable and risk-based set of controls to mitigate the risks of a Financial Institution (FI) being used to facilitate illicit activity.

In addition to the general guidance provided, Wolfsberg Group has pinpointed their focus on Financial Institutions (FIs), detailing five key areas to help improve their AML/CTF programs:

1. Assess Risk in Defined Priority Areas
   FIs should ensure they are consulting all resources in identifying risk, as opposed to just relying on their countries jurisdictions to provide transparency on risk in financial crime areas. FIs should then evaluate the risk of conducting business in these defined priority areas.
2. Implement/Enhance Controls
   Once FIs have identified potential risk, the next and most important step is to ensure they can protect themselves against it. This involves incorporating risk and compliance mitigating controls.
3. Prioritise Resources
   FIs should use a risk-based approach to categorize business that could be deemed high risk. High priority areas should then be prioritized, to ensure all risk mitigating checks are completed and business is conducted in accordance with regulation. In order to have the most effective AML/CTF programs FIs should also look to integrate developing technologies such as Machine Learning and Artificial Intelligence.
4. Engage with Law Enforcement
   In order to have full transparency and legitimacy in business, FIs should look to participate in Public-Private Partnerships (PPP). PPPs allow FIs to easily engage with local law enforcement, helping to determine potential new threats and high-risk areas.
5. Demonstrate AML/CTF Program Effectiveness
   FI's should articulate to their respective senior executives and board, both quantitative and qualitative analysis of their AML/CTF Program. In addition, the country's law enforcement can provide feedback on how FIs have incorporated effective risk and compliance procedures to ensure legitimate business.

Wolfsberg Group and the FATF will continue to promote these practices to prevent anti-money laundering and protect parties in the trade supply chain against financing terrorism. It's important for parties in the supply chain to conduct themselves accordingly to maintain a standard level of transparency and safe trading practice.

The link to the Wolfsberg Group Notice can be found here.

Post Author: Ravi Amin, Trade Finance Subject Matter Expert, IHS Markit Maritime & Trade