The Wolfsberg Group is a non-governmental association of thirteen global banks. Its goal has been to develop financial industry standards for anti-money laundering (AML), know your customer (KYC) and counter terrorist financing (CTF) policies. Its work is similar to what the Financial Action Task Force on Money Laundering (FATF) does on a government level. In addition to its AML-activities, the Wolfsberg Group also serves as a collective action group in the field of anti-corruption. The Wolfsberg Group has criticized FATF’s draft AML revision as “too prescriptive and too narrowly conceived”. The group operates in relative obscurity without press coverage.
In 1999, the U.S. Senate Permanent Subcommittee on Investigations called Citigroup’s chief executive officer, John Reed, to testify in a public hearing on what the chairman of the Committee, Senator Carl Levin, called a “rogues gallery” of clients at Citibank’s private bank. Mr. Reed turned to the new head of the Private Bank, Shaukat Aziz (later to become the Prime Minister of Pakistan) to take actions to both resolve allegations and ensure against future such events.
Mr. Aziz in New York called Frank Vogl, then vice chairman of the board of directors of Transparency International (based in Washington DC), to discuss a joint initiative. They met and Mr. Aziz explained it would be more credible if Transparency International, rather than Citi, invited other leading banks to join Citi in exploring efforts to attain voluntary understandings by major banks to full enforce know-your-customer standards.
A dinner was then organized in New York at Citi, co-hosted by Mr. Aziz and Mr. Vogl, was attended by representatives in New York of major banks, as well as then TI chairman Peter Eigen and then TI-USA board chairman Fritz Heimann. That meeting initiated discussions, led by Mr. Aziz and by the then chief risk officer, Hans-Peter Bauer of UBS in Switzerland.
A meeting was convened at UBS’s training center at Schloss Wolfsberg, near Ermatingen in Switzerland. The venue provided the name for the group.:1
Work proceeded by representatives of the banks and by Jermyn Brooks, a senior executive at Transparency International, which resulted in the first formulation of the Wolfsberg AML Principles. There were originally eight banks, and except for the US and Switzerland, most countries were represented by their largest private bank. Later “a major US investment bank, a large bank from Japan, and a Spanish bank” joined for the original eleven member-group.:4
In 2000, the Wolfsberg Group was an association of the following eleven global banks: Banco Santander, Bank of Tokyo-Mitsubishi UFJ, Barclays, Citigroup, Credit Suisse, Deutsche Bank, Goldman Sachs, HSBC, J.P. Morgan Chase, Société Générale and UBS.:1
After 9/11, the group changed its focus to counter terrorist-financing standards.
In June 2015, the Wolfsberg Group expanded to thirteen member banks as Standard Chartered Bank joined the association and Bank of America was mentioned as an existing member in the same notice.
As of 2015 the Wolfsberg Group has issued 14 documents they call The Wolfsberg Standards. The first document published in October 2000 was the Wolfsberg Anti-Money Laundering Principles for Private Banking, and revised in May 2002.
In November 2002, the group published the Wolfsberg Correspondent Banking Principles, in which they recommended a risk-based approach to AML and to develop an international registry for financial institutions, where those would submit information useful for conducting due diligence. After collaborating with Bankers Almanac, part of Accuity, it launched a Due Diligence Repository as a module separate from its service to support.
In September 2003 the group published the Wolfsberg Monitoring Screening & Searching Principles, in March 2006 the Wolfsberg Managing Money Laundering Risks, in March 2011 the Wolfsberg Trade Finance Principles, in October 2011 the Wolfsberg Guidance on Prepaid & Stored Value Cards, in 2012 the Wolfsberg Private Banking Principles, in 2014 the 14-page Wolfsberg Group Mobile and Internet Payment Services (MIPS) Paper, and a revision of Wolfsberg Correspondent Banking Principles.
The Wolfsberg Group meets with financial industry bodies, such as the European Banking Federation, the International Banking Federation,[clarification needed] the New York Clearing House, and the Society for Worldwide Interbank Financial Telecommunication (SWIFT).:7
In January 2011, the group commented on the Financial Action Task Force on Money Laundering (FATF), draft review of its 2003 AML/CTF standards. The Wolfsberg Group “caution[ed] FATF not to make recommendations or issue guidance that is too prescriptive with regard to any of the various risk indicators…for example that all foreign Politically Exposed Persons (PEPs) present a heightened risk”,:2,6 that “a categorical approach [is] not only unnecessary but fundamentally counterproductive”, “too prescriptive and too narrowly conceived”.:3
Press coverage and criticism
The group has issued four press releases: in April 2007, in May 2008 regarding the Revised politically exposed person FAQs, and in January 2015 about the US Treasury having incorporated “advanced sanctions list” format, based on data standards developed by the United Nations and the Wolfsberg Group.
Robert Mazur, a former undercover US DEA agent investigating money laundering, called the Wolfsberg group “wolves […] guarding the sheep”.
- ^Heimann, Fritz; Pieth, Mark (2018) . Confronting Corruption. Oxford University Press. pp. 225 et seq. ISBN 978-0-19-045833-1. OCLC 965154105.
- ^ Jump up to:ab c d e Hans-Peter Bauer and Gemma Aiolfi (2012). “The Wolfsberg Group”. In Mark Pieth (ed.). Collective Action: Innovative Strategies to Prevent Corruption (PDF). Zurich,St. Gallen: Dike. p. 11.
- ^“Waging War on Corruption,” by Frank Vogl, published by Rowman & Littlefield, 2012 and in paperback 2016)
- ^Mark Pieth, Gemma Aiolfi (26 October 2002). “The Private Sector becomes active: The Wolfsberg Process” (PDF). Wolfsberg Group. p. 9. Retrieved 18 May 2016.
- ^“We have joined the Wolfsberg Group of international financial institutions”. Standard Chartered Bank. 1 June 2015. Retrieved 18 May 2016.
- ^“Wolfsberg Standards”. The Wolfsberg Group. n.d. Retrieved 11 February 2015.
- ^com (n.d.). “Financial Counterparty KYC”. Bankersalmanac. Reed-Elsevier. Retrieved 11 February 2015.
- ^ Jump up to:ab David Bagley, Phillipp von Türk (6 January 2011). “The Wolfsberg Group Comment Letter on FATF Standards Review January 2011” (PDF). letter. The Wolfsberg Group. p. 9. Retrieved 11 February 2015.
- ^Robert Mazur (4 November 2010). “Banking on Terror”. Huffington Post. Retrieved 18 May 2016.
- ^Robert Mazur (13 September 2010). “Follow the Dirty Money”. New York Times. Retrieved 11 February 2015.
Ofer Abarbanel is a 25 year securities lending broker and expert who has advised many Israeli regulators, among them the Israel Tax Authority, with respect to stock loans, repurchase agreements and credit derivatives. Founder of TBIL.co STATX Fund.