Statement regarding money laundering inspection in Danske Bank A / S – transaction monitoring
In the period 18 August – 18 December 2020, the Danish Financial Supervisory Authority carried out an inspection concerning transaction monitoring in the area of money laundering in Danske Bank A / S (the bank).
The study was conducted in collaboration with the consulting firm Duff & Phelps (D&P). The investigation was a continuation of a cross-cutting investigation of transaction monitoring in the money laundering area in a selection of major banks in Denmark, which was initiated in 2019.
D&P submitted its final report to the Danish Financial Supervisory Authority on 18 December 2020 (the D&P report).
The D&P report contains an assessment of the suitability and efficiency of processes, systems and frameworks for transaction monitoring in the bank on the basis of current legislation and international best practice, and is based, among other things, on D & P’s knowledge of industry practice at European level for effective transaction monitoring.
The bank is the largest bank in Denmark. The bank operates all types of banking business, including simple deposit accounts for private customers, complex financial products for investors, full service banking solutions for traders and asset management and investment. The bank has a very significant number of private customers, corporate customers and institutional customers, many of whom have complicated group structures and / or financial arrangements.
The bank has subsidiaries, branches and representative offices in a number of foreign jurisdictions. Many of the bank’s procedures and technical solutions are common to the bank’s Danish and foreign business units, especially in the Nordic region. The volume of transactions, including cross-border money transfers, is significant. A significant part of the customers’ transactions are carried out via online banking or via cash handling.
The bank has significant activities within securities trading, trade finance and private banking, and the bank has a large number of cross-border correspondent connections.
Based on the above, the Danish Financial Supervisory Authority assesses that the bank’s inherent risk of being used for money laundering and terrorist financing is high.
In recent years, the bank has initiated significant measures with a view to strengthening the bank’s measures to prevent money laundering and terrorist financing, and in May 2020 has drawn up a comprehensive plan for this, called the Financial Crime Plan (FCP).
Based on observations and conclusions in the D&P report compared with current legislation and the Danish FSA’s practice, there are some factors that give rise to supervisory reactions. It is noted that observations and conclusions relate to the conditions at the time of inspection, which may have changed in the past time.
The Danish FSA notes that the bank’s systems and procedures for risk assessment of customers suffer from significant weaknesses. The area is covered by a previous injunction, which is being followed up, and the area is covered by FCP. However, the Danish FSA considers it crucial that the rectification of deficiencies in this area is accelerated as much as possible. Against this background, the bank has been instructed to submit a timetable with milestones that will ensure acceleration in this area.
The bank has been instructed to ensure that the bank’s customers are monitored from the moment the customer relationship is initiated, and that all new types of transactions are covered by the monitoring system.
In addition, the bank has been instructed to ensure adequate monitoring of trade finance in the bank, including preparing adequate business procedures for investigating transactions in the area.
The bank has finally been instructed to ensure that there is adequate transaction monitoring of customers in Danske Invest Management, Luxembourg branch, and to prepare adequate business procedures in the area.