Statement on inspection of the money laundering area in the Greenland Bank
In May 2018, the Danish FSA was on inspection at the Greenland Bank, Aktieselskab (the bank). The inspection was an investigation of the money laundering area as part of the ongoing supervision of the bank. The inspection included the bank’s risk assessment, policies and procedures, customer knowledge and the internal control setup.
Risk assessment and summary
The bank is the largest bank in Greenland and is headquartered in Nuuk. In addition to the head office, the bank has five branches in smaller cities in Greenland and is the only bank outside Nuuk. In addition to the actual branches there are in approx. 50 builds the opportunity for account creation, cash deposits and disbursements and account transfers in KNI’s rural stores (Pilersuisoq) under the so-called By-Bygd-Bank system.
It is the opinion of the Danish Financial Supervisory Authority that the bank’s inherent risk of being abused for money laundering or terrorist financing is normal to high assessed in relation to the average of financial companies in the Kingdom of Denmark.
It is hereby emphasized that the bank mainly offers the usual banking products and mainly has customers in Greenland. Establishing customer relationships with customers outside the national community rarely happens and requires approval from the bank’s Executive Board. The bank does not offer complicated financial products or private banking. The bank states that many of the bank’s customers have a small business scope and that apart from deposit accounts and card products, mainly low-risk products are offered. The bank has customer relations with virtually all Greenlanders and the bank is often the only bank connection of the customers. On the other hand, the area of cash transactions involving an increased risk of money laundering and terrorist financing is seen to be large, as the special geographical conditions necessitate the use of the By-Bygd-Bank system,
The inspection gives rise to supervisory reactions in a number of areas. In view of the time that has elapsed since the inspection was carried out, the Danish FSA is aware that the conditions in the bank may have changed significantly.
The bank is given an injunction to update its risk assessment so that it also relates to the bank’s risk of contributing to terrorist financing, cf. First
In addition, the Bank is required to ensure that sufficient information is obtained about the purpose and scope of all customer relationships and to prepare a timetable for updating the customer information in this regard.
Finally, the bank is required to ensure that all business customers obtain and identify information about the company’s real owners and to draw up a schedule for updating the customer information in this regard.
In addition, the Financial Supervisory Authority has comments on the bank’s business via the By-Bygd-Bank system, which enables account creation, cash deposits and payments and account transfers through the local KNI stores in approx. 50 settlements throughout Greenland. The system, which is based on an agreement between the bank and Greenland’s Self-Government, is part of Greenland’s infrastructure. However, it contains in its structure elements that may pose a risk in relation to money laundering prevention and terrorist financing. The FSA considers that in a future new agreement with the autonomous government, consideration should be given to how the above-mentioned conditions can be addressed.
Finanstilsynet inspection statement
Categories: Anti-Money Laundering Finanstilsynet Updates Inspection Reports