The continuing threat of money laundering through financial institutions is most effectively managed by understanding and addressing the potential money laundering risks associated with customers and transactions. Therefore, the Wolfsberg Group has developed this Guidance to assist institutions in managing money laundering risks and further the goal of Wolfsberg Group members to endeavour to prevent the use of their institutions for criminal purposes.
It is well understood that money launderers go to great lengths to make their transactions indistinguishable from legitimate transactions. Accordingly, it is difficult (at times impossible) for an institution to distinguish between legal and illegal transactions, notwithstanding the development and implementation of a reasonably designed risk based approach in an institution’s anti-money laundering program.
An assessment of money laundering risks will result in the application of appropriate due diligence when entering into a relationship, and ongoing due diligence and monitoring of transactions throughout the course of the relationship. A reasonably designed risk based approach will provide a framework for identifying the degree of potential money laundering risks associated with customers and transactions and allow for an institution to focus on those customers and transactions that potentially pose the greatest risk of money laundering.
The Wolfsberg Group believes that this Guidance will support risk management and assist institutions in exercising business judgement with respect to their clients. There is no universally agreed and accepted methodology by either governments or institutions, which prescribes the nature and extent of a risk based approach. Accordingly, this Guidance seeks to articulate relevant considerations which institutions may find useful in developing and implementing a reasonably designed risk based approach. The specifics of an institution’s particular risk based process should be determined by each institution based on the operations of that institution. This Guidance is not designed to prohibit potential customers from engaging in transactions with institutions, but rather assist institutions in effectively managing potential money laundering risks.
Link to the detailed guidance: click here
Link to FATF Risk Based Approach guidance: click here