National Risk Assessment Framework: Wolfberg Group
Wolfsberg
Group, an association
of 13 global banks which oversees highly influential standards on Anti-Bribery and
Corruption (ABC) compliance. Started as a
meeting of banks in 1999 who adopted a number of best practice standards under
the name Wolfsberg principles. The group was
named after Wolfsberg Castle in Switzerland, where its first meeting took place.
On 22 September 2021 the association under Swiss law adopted the name
"The Wolfsberg Group" and was formally founded in Basel. There are 12 members
after as of July 1, 2024,
Credit Suisse (Schweiz) AG merged with UBS Switzerland AG, and Credit Suisse
(Schweiz) ceased to exist as a separate legal entity
In addition to its AML-activities, the Wolfsberg Group also serves as a Collective Action group in the field of anti-corruption. Its members are senior financial crime compliance leaders from the member banks. They work jointly through various Working Groups to develop new documents or update existing ones.
|
Wolfsberg
Group Members(2024) |
||
|
Bank of America |
Société Générale |
HSBC |
|
J.P. Morgan Chase |
Deutsche Bank |
UBS |
|
MUFG Bank |
Barclays |
Goldman Sachs |
|
Banco Santander |
Citigroup |
Standard Chartered Bank |
The Wolfsberg Group's goal has been to
develop financial industry standards in the private sector for anti-money
laundering (AML), Know Your Customer, (KYC) and Counter Terrorist Financing (CTF)
policies including Sanctions Compliance. Its work is similar to what the
Financial Action task force on Money Laundering (FATF) does on a government
level.
The Wolfsberg Group has also collaborated with
other organizations, such as the financial Action Task Force(FATF), to help
combat financial crime, counter-terrorist financing, and improve global AML,
CTF, and sanctions compliance standards.
Main
activities include:
·
Standard setting for the Wolfsberg
Group of banks on financial crime risks;
·
Participation in supranational fora
for legislative developments in the field of financial crime;
·
Stakeholder engagement with Members,
industry (non-member banks), regulators and civil society;
·
Education and training.
It has
published several documents popularly known as Principles of Wolfsber Group and are
periodically updated according to the economic situation.
The Wolfsberg Principle covers a wide range of
topics, including how to conduct due diligence on customers, how to identify
and report suspicious transactions, and how to implement effective internal
controls to prevent money laundering and terrorist financing. The Wolfsberg
Group's guidelines are not legally binding but still affect the financial
industry and banks around the world are voluntarily adhering to the
principles.
The Wolfsberg Group's rule of thumb for banks is
that they only accept customers whose funding can be approved, allowing
transparent agreements to achieve the targeted transparency in money laundering.
In order to achieve this, the Wolfsberg Group banks should find the sources of
funds, assets, and real owners of the companies and then update this
information periodically.
Principles of the Wolfsberg Group
The group’s publications include
guidance and principles related to tax evasion, payment transparency, and
anti-bribery and anti-corruption. Of particular note are recent publications
addressing sanctions screening, negative news screening,
and PEP guidance.
Additionally, the Wolfsberg Group also publishes and updates
a Correspondent Banking Due Diligence Questionnaire (CBDDQ), designed to establish
a standard for
cross-border as well as correspondent banking due diligence.
The
Wolfsberg Principles are widely regarded as authoritative guidance for how
financial institutions should respond to the rising risks of bribery and
corruption. New guidance has recently been released for the first time in six
years.May 30, 2024
The
Group has now replaced its guidance from 2017 with a new set of standards. It
says the aim of the updated guidance is to advise the financial
services industry on how to “develop, implement and maintain an effective
ABC program”, and to “promote a culture of ethical business practices and
compliance with ABC legal and regulatory requirements”.
The
standards were drafted by representatives of some of the biggest banks in
Europe, North America, and Asia, including Santander, Goldman Sachs, Deutsche
Bank, Credit Suisse, Barclays, MUFG Bank and Société Générale, in association
with experts and civil society organizations. While the standards
are not binding, they are credited with setting the agenda for
financial institutions’ approach to ABC, Counter-Terrorist Financing, and
compliance in general.
The
18-page document makes clear that firms should adopt a risk based approach in
their ABC compliance programs by assessing the following factors:
- The
“locations in which they do business”
- Their
customer base and “types of customer business activities”
- The
industries in which the financial institution does business
- Their
products and services
- Their
business model
- Their
use of third parties and intermediaries
- Any
interactions with “Public Officials and State-Owned Entities”
- Whether
they are pursuing business opportunities from, or providing benefits to,
“government or wholesale customer entities”
Once
companies have identified the level of risk posed by an entity or client, they
should apply due diligence and ABC controls which are proportionate to
that level. Importantly, the guidance says firms should “periodically assess”
these elements to ensure they are capturing new and emerging risks. The
Principles outline the types of changes which could raise the
level of risk to which an institution is exposed, including:
- “Changes
in business activities”, particularly if a company onboards a different
type of client, or enters a new sector or jurisdiction.
- Activities
by a third party which may create “potential liability “ for the
financial institution.
- “Emerging
bribery and corruption risks”, including new gifts, hospitality
arrangements, or political contributions.
Happy Reading,
Those who read this, also read
1. Global Measures on ML/FT : IMF
2.Country Risk Assessment Framework: World Bank4. National Risk Analysis (NRA) Framework
5. Country Risk Analysis Framework: IMF
6. Framework for Country Risk Analysis : FATF
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