Finanstilsynet inspection of Mercury Andelskasse
Statement of inspection in Merkur Andelskasse (money laundering area)
In August 2019, the Danish FSA was on inspection in Merkur Andelskasse. 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 knowledge procedures, including monitoring of private and corporate customers.
Risk assessment and summary
The cooperative’s business model is based on running traditional but value-based banking. By value-based it is meant that the share fund focuses on the following values; green energy, social responsibility and culture and education (Enviromental Social and Corporate Governance). The cooperative fund incorporates these values when assessing both lending and deposit customers.
The fund has primarily customers living in Denmark. The cooperative endeavors that business customer relationships should, as a starting point, be full customer relationships. The cooperative does not allow its customers to deposit or withdraw cash in the cooperative’s own departments, but has a number of 24-hour agreements.
The fund has primarily basic and simple products, but the fund has a number of products with special value elements, including company pensions for employees in housing, and special products for few companies in developing countries.
The Danish Financial Supervisory Authority considers that the fund’s inherent risk of being used for money laundering or terrorist financing is normal to high assessed in relation to the average of financial companies in Denmark. The fund’s restriction on traditional financial products and customers, primarily residing in Denmark, does not change the Financial Supervisory Authority’s assessment.
Based on the inspection, there are a number of areas that give rise to supervisory reactions.
The Danish Financial Supervisory Authority found that the fund’s risk assessment does not contain a sufficiently documented analysis of the fund’s risk factors or an actual conclusion. Likewise, the risk assessment does not adequately address the risk of the cooperative being used to finance terrorism. Against this background, the cooperative fund is instructed that the risk assessment must be revised accordingly.
The Financial Supervisory Authority has found that there is a personal correlation between the fund’s compliance function and the money laundering officer. The cooperative is given an obligation to ensure that relevant and sufficient compensatory measures are introduced, and to prepare and submit a detailed account of the cooperative’s future organization in the area of money laundering. However, the Danish Financial Supervisory Authority finds that a risk manager has been hired to do this.
Finally, the Financial Supervisory Authority found, when reviewing the cooperative’s ongoing monitoring, that the cooperative has a large number of inactive customers in its system. Against this background, the cooperative will receive an order to ensure that documents, data or customer information is continuously updated, as well as to explain how updating is expected to be carried out.
Categories: Anti-Money Laundering Finanstilsynet Updates Inspection Reports