Wolfsberg Group: public-private partnerships can aid participants in combating "dirty money"

In its most recent report, The Wolfsberg Group stated that successful public-private partnerships can aid "public and private sector participants enhance their effectiveness" in preventing the use of dirty money and other associated crimes as well as "reduce unnecessary and wholesale de-risking."

The Wolfsberg Group of international banks has welcomed additional investment in PPPs and praised their effectiveness in combating financial crime in a recently released report on collaboration.

According to the report, "when specific risks and actionable information are shared, and communication between the private and public sectors is strong, the private sector can take a more targeted, and informed approach to risk-management thus protecting the financial system and public from harm."

In order to effectively combat financial crime, the paper focuses on "successful engagement through Public-Private Partnerships" and the "pivotal role that national authorities must play."

The Group, which is comprised of thirteen major international banks, emphasized that "collaboration and dialogue lead to far better outcomes than initiatives pursued in a silo," and that "there is a need in the financial crimes space for a more robust public-private information-sharing system for financial institutions to fulfil their obligations better and to assist national authorities in combating financial crime more effectively."

Additionally, the Group stated that Financial Institutions "often lack a clear legal framework for permissible information-sharing with government authorities and peer FIs," and that "without guidance from national authorities on the value of FI reporting, a framework for permissible information-sharing (through PPPs), and clearly articulated, targeted national priorities, FIs are hampered in their ability to assist law enforcement effectively, which unnecessarily limits their potential."

The Wolfsberg Group emphasized that national authorities must set national priorities in order for Financial Institutions to "focus their AML/CFT efforts and resources on activity of inherently higher value to law enforcement." This is something that both government and business are increasingly realizing.

The Group also provided a list of the fundamental components of successful PPPs, which give financial institutions the "most direct and impactful opportunity" to "collaborate with public-sector stakeholders to identify and address financial crime risks."

These consist of:

1. Senior public sector leaders actively participate in and sponsor the PPP.

2. The PPP has a set structure and membership and holds regular meetings.

3. The PPP membership is diverse and inclusive.

4. The PPP focuses on exchanging information that can be used.

5. A legal framework for information sharing supports the PPP.

6. The multi-directional nature of PPP information sharing

7. The PPP has systems in place to monitor the effects of its activities.

The Wolfsberg Group has urged financial institutions to "participate actively in information-sharing frameworks to foster a more effective AML/CFT regime" and the public sector to "prioritise the establishment and strengthening of empowered PPPs."

The Group concludes: “this focus on improving the outcomes of collective investments in fighting financial crime will boost the efforts of law enforcement and will increase the effectiveness of AML/CFT programmes – ultimately benefiting public sector participants, private sector stakeholders and society at large."

By fLEXI tEAM