Danish not fit for consumption

Leadership must increase focus on money laundering rules

The managers of the financial companies generally do not have enough focus on what they have to do to prevent companies being used for money laundering or terrorist financing. This is the conclusion of the Danish FSA on the basis of 55 money laundering inspections from mid-2017 to the end of 2018. Also in several other areas, the companies must improve.

The vast majority of companies are aware of the risk of being used for money laundering and terrorist financing. But the managers often do not have enough focus on what they in practice have to do for the companies to live up to the money laundering rules. The Danish Financial Supervisory Authority writes in a newsletter prepared on the basis of 55 implemented money laundering inspections from mid-2017 to the end of 2018.

“It is the management’s task to thoroughly assess how the company in question can be abused for money laundering or terrorist financing. If the management does not make the right decisions, there is a risk that the company does not meet the requirements of the money laundering legislation, and that it is actually used for money laundering or terrorist financing, ”says Head of Unit Stig Nielsen from Finanstilsynet.

Based on the risk assessment, the management must decide on the company’s organization, staffing, systems and procedures in relation to preventing money laundering and terrorist financing. Management must also ensure effective internal control, writes Finanstilsynet.

Eight typical offenses

In the newsletter, the Danish Financial Supervisory Authority describes the eight types of breaches of the money laundering legislation, which most often have resulted in orders or other supervisory reactions in connection with the 55 inspections:

  • Tasks are not performed on a risk-based basis.

  • Risk assessments are not sufficient. 

  • Policies are not sufficiently operational.

  • Procedures are not sufficiently worked out.

  • Customer knowledge procedures are not sufficient.

  • Customers and transactions are not adequately monitored.

  • Correspondent banks are not sufficiently assessed.

  • Functional separation is not sufficient.

About the supervision of money laundering rules

Since mid-2017, the Danish Financial Supervisory Authority has significantly strengthened its efforts in the field of money laundering in connection with the fact that the Danish Parliament has provided more resources for the money laundering authority. Most recently, a political majority in March 2019 entered into a settlement on strengthening the efforts against financial crime, where the Danish FSA was strengthened with more resources and competencies to solve the tasks. The Danish FSA carries out money laundering supervision with a total of approx. 1500 companies.

The Danish Financial Supervisory Authority supervises whether the companies comply with the statutory requirements, in particular that they know the customers and monitor the customers’ transactions. The audit must thus primarily ensure that the companies fulfill their obligations with regard to the prevention of money laundering and terrorist financing. The investigation of any cases of money laundering is the task of the police.

The Danish Financial Supervisory Authority expects to carry out 35 money inspections in 2019 and to follow up on the inspections from 2018. The Danish Financial Supervisory Authority will regularly inform about the overall conclusions of the inspections.

Links:

Finanstilsynet Notice

Danish FSA Newsletter

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