J. Edward “Ned” Conway became Executive Secretary of the Wolfsberg Group on 1 November 2024, succeeding Alan Ketley. With its 12 member banks, the Wolfsberg Group is a globally respected source of expertise on financial crime risk management, setting industry standards and building bridges between financial institutions and other stakeholders. The Basel Institute serves as Secretariat to the Group, which is now in its 25th year.

In this Q&A, Ned challenges us to consider how we can make the fight against financial crimes more effective. He also highlights the value that the Wolfsberg Group can provide to the financial services industry, policymakers and law enforcement, with its global reach and technical knowledge of the financial crime landscape and financial industry.

What drives your career in countering financial crime?

You can read my bio here, but I can highlight a couple of things that motivate me.

First, my experiences working for the US Department of Defence in Iraq, in a unit focused on analysing and disrupting the financing of terrorist groups and insurgent networks. Most of the old-school ideas and methods we were trying were just not working. That made us ask: What are we ultimately trying to achieve by countering threat finance? What plan or strategy will get us there more effectively?

As financial crime evolves, it remains vital to keep questioning our goals and the effectiveness of the measures we are using to achieve them. It’s a fascinating, ever-changing field.

Second, I’m an analyst at heart and love digging into data, so finance is a natural field. But I also relish personal interactions and am fascinated by psychology and behaviour, especially decision-making.

After leaving the Department of Defence I studied for a PhD in international relations. During my field work in Central Asia, I saw the real-life impacts of corruption and financial crime on ordinary people and businesses. It was clear that financial crime compliance and risk management are not only interesting fields in themselves. They are also a chance to put the structural pressures in place to incentivise good behaviour, to make it easier for those in power to “do the right thing” and for ordinary people to feel the benefits.

And third, properly managing financial crime risks can also have a positive impact on the environment, another area of focus I have been passionate about from a young age. Take illegal logging, illegal mining and wildlife trafficking in places like the Amazon. If financial institutions and law enforcement can do more to disrupt the finances of the organised crime groups profiting from these crimes, the impact on their operations will be significant. That’s positive for biodiversity and for the climate, as well as for local people.

What drew you to the Wolfsberg Group?

First and foremost, it’s the people. It’s exhilarating to work with a group of individuals who are highly knowledgeable about the technical side of countering financial crime and just as passionate about doing it as me.

So who are we exactly? Our members represent 12 global banks. When you consider their correspondent banking networks, the majority of the US dollar, euro and pound sterling financial system relies on our member banks to process transactions. And these 12 banks collectively have hundreds of millions of customers in their own right, from individuals to large corporations across the world.

Primary delegates to the Group are usually the heads of the banks’ financial crime compliance divisions, and the secondary delegates are their deputies. Other senior bank staff specialised in, for example, complex investigations, fraud, virtual assets or sanctions form subject-matter expert working groups.

We also engage with external stakeholders like law enforcement, financial intelligence units, regulators and supervisors, and civil society, depending on the topic.

It’s safe to say that all of us see the importance and value of our work and want to get it right. That’s vital to our reputation as a trusted source of technical expertise on financial crime risk management.

I pay tribute to Alan Ketley, Tracy Paradise, Hans-Peter Bauer, John Cusack, and other previous secretaries, chairs and members for developing this committed group not just of financial institutions but of people.

What does the Group do?

In essence, we act as a bridge between financial institutions and the needs and goals of policymakers and law enforcement.

On the policy side, we can contribute to shaping more effective laws, regulatory guidance and measures against financial crime. For example, if the EU is thinking of developing new regulations on payment transparency, we can provide constructive feedback on proposed measures and drafts. We can also help regulators and supervisors to responsibly cut red tape and foresee the consequences of deregulation.

On the law enforcement side, we exchange on investigative techniques, trends and typologies in financial crime. This helps financial institutions to hone their financial crime risk management and reporting frameworks. It also helps law enforcement and FIUs to understand how they can use banks’ information and capabilities more effectively.

How does your work translate to practical guidance?

We provide practical frameworks and guidance for the financial services industry as a whole.

A prime example is the Correspondent Banking Due Diligence Questionnaire or CBDDQ. This is an industry standard for conducting reasonable due diligence before agreeing correspondent banking relationships. We have translated the related Guidance, Glossary and FAQs into various languages to make it more accessible.

Other examples include a recent Statement on Monitoring for Suspicious Activity. That line of work essentially outlines the responsible framework for innovation in a highly regulated sector, applying artificial and machine learning to improve our ability to support law enforcement and meet supervisory expectations.

How does the Group work?

Our approach is to build trust and provide constructive feedback based on our technical expertise and deep understanding of the global financial services industry.

We are a consensus-based group and we do what we say. When our member banks agree on a document, like a statement or a set of guidance, we collectively commit to doing what we recommend in the document. That’s a very powerful statement. And building, finding, and maintaining that consensus takes constant care and management.

One area I’m keen on advancing is how we can better move from strategic alignment – high-level agreement on financial crime goals and measures – to operational gains, i.e. more effective systems in practice.

For example, it’s easy to say we should use artificial intelligence to improve systems for monitoring and reporting suspicious transactions to the authorities. In practice, doing so will need things like testing, validation, analysing results, explaining how algorithms are working… technical steps that don’t make headlines but that are essential to making progress and doing so responsibly.

We’ll be doing more workshops and face-to-face interactions to advance those technical steps. That will also help us to tease out areas where there are legitimate differences of opinion between parties, and we can then focus our efforts on addressing those concerns.

What are the Group’s priorities?

Thematically, we continue to take a deep look at:

• Suspicious transaction monitoring. As an industry, we put a huge amount of resources into monitoring and reporting suspicious transactions to the competent authorities. But it is broadly recognised that the system is not achieving the desired results.
• How we assess risk. This includes applying a risk-based approach to financial crime compliance to avoid detrimental impacts on the underbanked, including non-profit organisations, improving financial inclusion while simultaneously prioritising resources to address clear financial crime risk.
• Fraud, especially “confidence scams”, where victims are convinced they are investing in an opportunity or relationship that turns to be completely false.

We are also very interested in better ways to measure and assess the effectiveness of our financial crime compliance efforts in general. We work with key regulatory authorities in the US, UK EU and other countries and regions as regulation is reformed.

What bridges do you see with the Basel Institute’s work?

Like the Basel Institute, we are primarily focused on technical competence and building bridges between stakeholders, not advocacy in support of narrow interests.

In fact, the Wolfsberg Group is an early example of Collective Action – bringing together different stakeholders in a sustained engagement to improve business integrity, or in our case, the management of financial crime risks. The Basel Institute has huge credibility in this space and contributed to the Group’s foundation 25 years ago.

And beyond our alignment with the goals of the Basel Institute’s asset recovery and Green Corruption workstreams, a clear point of interest is the Basel AML Index. This tool for country-based financial crime risk assessments is a core aspect of any financial institution’s risk management process. Most banks use the Basel AML Index in their risk models.