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Finanstilsynet studies quick-loan companies… and AML

Money laundering inspections in quick loan companies

In the second half of 2019, the Danish Financial Supervisory Authority conducted cross-cutting investigations in the area of ​​money laundering in a number of quick loan companies. The investigations were part of the ongoing supervision of the financial companies.

Purpose and scope of the studies

The surveys included ten quick loan companies. The Danish FSA investigated whether the companies complied with the Money Laundering Act and the rules issued pursuant to it, as well as the rules on financial sanctions. The Danish FSA focused in particular on the following areas in the companies: 

  • Risk assessment regarding money laundering and terrorist financing
  • Organization in the field of money laundering
  • Policies, business procedures and procedures
  • internal controls
  • Customer knowledge, identification and monitoring on the basis of selected samples. 

The study’s conclusions 

The Danish Financial Supervisory Authority found that the quick loan companies primarily focused on the credit part of their business, while the focus on the money laundering part was very inadequate. 

The Danish Financial Supervisory Authority found, among other things, the following shortcomings in the companies:

  • The risk assessments were insufficient as they contained only to a limited extent identification and analyzes of the companies’ risk factors.
  • Money laundering and terrorist financing policies were inadequate as they did not adequately state how companies would reduce the risks of being used for money laundering and terrorist financing.
  • The companies did not obtain information about the purpose and intended nature of the customer relationship.
  • The companies had not initiated the necessary monitoring of their customers, i.a. information about the individual customer was not continuously updated and stored.
  • The companies had not tightened supervision of business relations with politically exposed persons or close and close partners to politically exposed persons.
  • The companies did not immediately notify the Money Laundering Secretariat of suspicious transactions.

The Danish FSA’s investigations resulted in a number of quick loan companies being reported to the police for non-compliance with the Money Laundering Act. These cases are still being handled by the Public Prosecutor for Special Economic and International Crime. In addition, the Danish Financial Supervisory Authority has issued a number of injunctions, etc. against the companies investigated, which necessitate major changes in their way of dealing with money laundering risks. 

Quick loan companies particularly vulnerable

If companies do not comply with the Money Laundering Act, they could potentially be used for money laundering or terrorist financing. Quick loans are a quick way to raise funds, and several examples have been seen in other European countries of quick loans being used to finance terrorist attacks. The means can thus end up in the conflict zones.

Continued focus on compliance with requirements

As the Danish Financial Supervisory Authority has to a large extent been able to establish that the companies do not comply with the rules, the Danish Financial Supervisory Authority has decided to write to the managements of all quick loan companies and draw their attention to the rules and compliance with them. 

The Danish FSA will also continue to provide guidance on the Money Laundering Act and inform companies and their managements of the importance of complying with the rules of the Money Laundering Act. 

Link:

Finanstilsynet Notice

Categories: Anti-Money Laundering Finanstilsynet Updates

eric9to5

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