Wolfsberg Group Outlines Steps to AML/CTF Effectiveness

Source: Regulation Asia Manesh Samtani, Regulation Asia 2020-08-14

FIs should consider adopting technology such as AI and machine learning more widely. The Wolfsberg Group “strongly encourages” participation in PPPs.

The Wolfsberg Group has published a statement on outline the steps financial institutions should take to evolve their AML/CTF programmes to enhance their effectiveness.

The statement follows a December 2019 statement which outlined the key elements of an effective AML/CTF programme: (1) complying with AML/CTF laws and regulations; (2) providing highly useful information to relevant government agencies in defined priority areas; and (3) establishing a reasonable and risk-based set of controls to mitigate the risks of an FI being used to facilitate illicit activity.

In the new statement, the steps FIs should take are outlined as follows:

Assess risk in defined priority areas: Typically, government or law enforcement agencies will define a set of national priorities for FIs to focus on. Where this does not exist, FIs can leverage the priorities described in the jurisdiction’s National Risk Assessment or equivalent publication.

Implement/enhance controls: Once an FI has confirmed its potential risks in the priority areas, it should assess and if needed enhance its controls and associated governance to mitigate those risks.

Prioritise resources: FIs should use a risk-based approach to reallocate time and resources from lower-risk areas to higher-risk areas. If proven to be beneficial following assessment, FIs should consider adopting technology such as AI and machine learning more widely.

Engage with law enforcement: FIs should actively engage with law enforcement – such as through PPPs (public-private partnerships) – in order to understand operational priorities, trends and emerging threats, and to assist the agencies to the “greatest extent possible”. The Wolfsberg Group “strongly encourages” participation in PPPs as a key component of an effective AML/CTF regime.

Demonstrate AML/CTF programme effectiveness: FIs should articulate effectiveness to their senior executives, Boards, supervisors and examiners using both quantitative and qualitative factors. Effectiveness can be enhanced when law enforcement and supervisors provide feedback on an FI’s reporting and AML/CTF implementation.

The Wolfsberg Group says this approach will enable FIs to detect and deter criminal activity more effectively and efficiently, while at the same time reducing friction on innocent customers and helping governments achieve their financial inclusion objectives.

The statement is available here.

AML

CTF

financing

Wolfsberg Group Outlines Steps to AML/CTF Effectiveness

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