AML/CTF, Sanctions and Insider Trading
Wolfsberg Group Issues Frequently Asked Questions on Country Risk
On March 20, 2018, the Wolfsberg Group published a set of Frequently Asked Questions on financial crime country risk. Country risk is the additional risk created by investing in, or lending cross border to, a foreign country in the context of credit facilities.
The FAQs cover: (i) the meaning of country risk in the context of financial crime compliance; (ii) the data sources that should be considered when developing a methodology to assess country risk; (iii) the frequency with which data sources should be refreshed; (iv) how sanctions should be considered in country risk methodologies; (v) the models or methodologies available to financial institutions to measure country risk, and how (and how frequently) financial institutions should test and validate their effectiveness; (vi) matters to be considered when purchasing and using an off-the-shelf commercial product to determine financial crime country risk ratings; (vii) whether there is standard or conventional methodology to assess country risk; (viii) how missing data points should be dealt with; (ix) whether overrides or discretionary risk rating changes should be allowed; (x) who should maintain ownership of the organization's FCCR Methodology; (xi) who uses the assessment results and how are the ratings disseminated; (xii) how the FCCR rating methodology should drive customer due diligence and enhanced due diligence requirements; and (xiii) whether a financial institution should have a country risk assessment expressed as a country risk rating.
The Wolfsberg Group was established in 2002 with the objective of developing frameworks and guidance for the management of financial crime risks. Its current membership comprises 13 major banks. Financial crime risk includes money laundering, sanctions, bribery and corruption risks, financial secrecy and tax transparency. The Group believes that the new country risk FAQs will contribute to the promotion of effective risk management. This will assist its member banks in protecting their institutions against financial crime risk.
The Frequently Asked Questions are available at: https://www.wolfsberg-principles.com/sites/default/files/wb/Wolfsberg%20FC%20Country%20Risk%20FAQs%20Mar18.pdf.
Financial Action Task Force Report to G20 Finance Ministers and Central Bank Governors
On March 16, 2018, the Financial Action Task Force published its report to G20 Finance Ministers and Central Bank Governors, in advance of their meeting in Buenos Aires scheduled for March 19 – 20, 2018. In the report, the FATF reiterates its commitment to tackle all sources, techniques and channels used in terrorist financing and to continue its work to increase financial transparency and improve the environment for remittances.
The report gives an overview of the FATF's recent work by providing stock-takes on the following workstreams:
- strengthening the FATF's institutional basis, governance and
- countering the financing of terrorism and proliferation;
- improving transparency and the availability of beneficial ownership information;
- supporting financial inclusion and access to regulated financial services;
- FATF engagement with judges and
prosecutors to improve the effectiveness of the criminal justice
- the risks and opportunities of FinTech, RegTech and virtual currencies.
The FATF proposes to continue work on these workstreams and provide a progress report to G20 leaders at their Summit in Buenos Aires on November 30 – December 1, 2018.
The report is available at: http://www.fatf-gafi.org/media/fatf/documents/FATF-G20-FM-CBG-March-2018.pdf.
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