Statement of inspection in the Andelskassen Community Fund (money laundering area)
In October 2019, the Danish FSA was on inspection at the Andelskassen Community Center. The inspection was an investigation of the money laundering area as part of the ongoing supervision of the company. The inspection included the company’s risk assessment, policies, procedures and internal controls, as well as customer awareness procedures, including monitoring of retail and corporate customers.
Risk assessment and summary
The cooperative’s business model is based on an idea of sustainable economy, community and solidarity. The cooperative’s customers include private, small and medium-sized companies. The cooperative limits its business model to basic and simple products, and has thus opted out of offering complex or speculative financial products.
The Danish Financial Supervisory Authority considers that the Andelskassen’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 Denmark. The assessment places particular emphasis on the fact that Andelskassen offers a number of financial products to both private and corporate customers. Andelskassen’s financial products are traditional and its primary focus is on its local area with customers residing in Denmark.
Based on the inspection, there are a number of areas that give rise to supervisory reactions.
The Danish Financial Supervisory Authority found that Andelskassen’s risk assessment does not adequately contain a documented analysis based on Andelskassen’s business model, and includes an assessment of Andelskassen’s risk factors associated with customers, products, services and transactions, as well as delivery channels and countries or geographical areas where the business activities is exercised and does not adequately address the risk of the Andelskassen being abused for money laundering and terrorist financing separately. Against this background, the company is instructed that the risk assessment must be revised accordingly.
The cooperative is given a mandate to revise the cooperative’s money laundering policy, so that it clearly contains the principled decisions on how the cooperative is organized so that the risks of money laundering and terrorist financing are countered.
The Andelskassen is instructed to revise its business knowledge processes, so that the Andelskassen is able to determine when the risk of money laundering and terrorist financing is assessed to be increased and the Andelskassen must therefore carry out stricter customer knowledge procedures. The fund also needs to revise the risk classification of customers so that it is extended to include risk management associated with the fund being abused for financing terrorism.
The cooperative is also required to partly ensure that adequate customer knowledge procedures are carried out for all customers, including that information on the purpose and intended nature of all customers is obtained, and that the customer information is regularly updated.
In addition, Andelskassen is required to ensure that information about the purpose and intended nature of the customer relationship is used in Andelskassen’s electronic monitoring.
Finally, Andelskassen is required to prepare documentation for the investigations conducted by Andelskassen on suspicious transactions.