Summary

The 25th anniversary Wolfsberg Forum concluded on Friday, May 23, bringing together a select group of 100 leaders from around the world dedicated to disrupting financial crime. The Wolfsberg delegates were joined by public, private and civil society experts from Asia, Africa, the Middle East, Europe and the Americas to focus on resolving the core issues that continue to challenge the financial crime community.

The Forum encouraged the participants to transition from problem setting and into problem solving through a series of panels connected by smaller breakout sessions. The breakout groups were balanced by supervisory, financial intelligence unit, law enforcement, and private and civil society voices to ensure the spectrum of stakeholder interests across the community were both raised and addressed. This included representation from traditional banks, fintech payment service providers, stablecoin issuers, and digital asset service providers. The themes covered by the Forum included:

• Suspicious activity reporting reform. What are we trying to achieve with suspicious activity reporting? High quality leads or a “drag net” for big data analytics? And what are the distinct implications for private sector monitoring systems, FIUs, examiners, and law enforcement?
• Why feedback matters and how we can advance, with a focus on private-to-private, public-to-public, and private-to-public frameworks.
• Ensuring supervision and enforcement incentivise an effective approach to disrupting financial crime.
• Reimagining the risk assessment to be more accurate, timely, and more valuable at the national level, at the enterprise-wide level for financial institutions, and for onboarding and maintaining customers. This included seeing the risk assessment as a “process, not product”, understanding how assessing risk coexists with assessing threats, and embracing risk-based supervision.

Underscoring all the thematic areas was a specific focus on the application of the risk-based approach, the need to build trust, and how the distribution of financial crime risk across public, private and civil society actors both mitigates and exacerbates the fear of failure. The Forum closed with participants applying the insights gained from the sessions against a series of case studies from around the world. The studies highlighted the prevalence of fraud networks and the need to bridge the cultural “fiat-digital asset divide” to become more effective in disrupting financial crime and protecting society from scams.

Key areas of convergence and next steps

The following shared views emerged over the course of the three-day gathering:

- Making cost-benefit decisions on monitoring for suspicious activity will unlock the resources necessary to achieve law enforcement priorities and get bad actors out of the regulated financial system, while also enabling financial institutions to reduce wasteful spending. More than half of the participants (60%) believe that a lack of clarity on the definition of “suspicion” leads to over and/or under-reporting of suspicious activity.

- Redirecting some of those resource gains to private-public/private-private partnerships will enable us to better respond to threat actors with the necessary speed and agility. Private-to-private information sharing, for example, was regularly referenced as a critical advancement, and giving credit to financial institutions during supervisory examinations was viewed as the best way to incentivize private-to-private information sharing. Also important to participants was the need for a legal safe harbour in doing so and ensuring that private-to-private initiatives were not "additive" but rather based on a financial institution redirecting resource away from ineffective financial crime controls.

- This will require us to pivot our collective culture based in “fear of failure” into one of rapid learning and continuous improvement. Fear of failure across all stakeholders – from financial institutions to financial intelligence units to examiners – was viewed by many participants as a key blocker to progress, ultimately promoting the over-reporting of SARs/STRs (49%) by the private sector and the issuance of unnecessary observations or recommendations in examinations (45%) by supervisory authorities.

- The secret to pivoting our culture and making operational gains is maintaining and building upon the foundation of trust we established at the Forum. Trust among key actors in the community is at an all-time high, but it needs to go further. The prevalence of public-private partnerships over the last several years has facilitated trust among the private, public and civil society sectors, debunking the myth that we’re not all on the same team and driving home the reality that our only opponents are the bad actors themselves. However, trust will need to continue to develop in order to make hard decisions on de- prioritisation and step away from activities that do not provide sufficient value. Seeking a common view among all stakeholders on risks and risk-ownership will be critical if we are to advance.

- Each of the 100 participants committed at the Forum’s end to take concrete action focused on translating this strategic alignment into tangible operational gains. Wolfsberg committed in turn to organise smaller groups to further advance these key areas of convergence and raise substantive proposals to critical decision-makers at the national, regional, and international level.

The Forum opened with remarks from Wolfsberg co-chair Emma Molvidson (UBS) and was closed by co-chair Jen Calvery (HSBC). Both chairs emphasized the critical role that Wolfsberg has played over the last 25 years and will continue to play in the future in using the Group’s convening power and dedication to collective action to ensure real change in the fight against financial crime. The Group is committed to maintaining the momentum built during the Forum and will continue to engage with the participants to realise tangible, operational gains in effectively and efficiently safeguarding the international financial system.