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Finanstilsynet Statement on Nordea transaction monitoring inspection

Statement regarding money laundering inspection in Nordea – 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 Nordea Denmark, a branch of Nordea Bank plc, Finland (the “branch”).

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.

Summary

The branch is the second largest bank in Denmark. The branch offers all types of banking products from simple deposit accounts to private customers, complex financial products to investors and full service banking solutions for traders of all sizes, asset management and investment. The branch has a very significant number of private customers, corporate customers and institutional customers, many of whom have complicated group structures and / or financial arrangements. A larger number of customers are resident in or domiciled abroad, just as a larger number of physical customers are distance customers.

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 in connection with account payments, currency exchange and money transfer. 

The branch has significant activities within securities trading, trade finance, and private banking, and the branch has an extensive number of cross-border correspondent connections. 

On this basis, the Danish Financial Supervisory Authority assesses that the branch’s inherent risk of being used for money laundering or terrorist financing is high. 

In recent years, the branch has taken significant steps to strengthen the branch’s anti-money laundering and terrorist financing measures. 

Based on observations and conclusions in the D&P report compared with current legislation and the Danish FSA’s practice, there are a number of 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 branch has been instructed to ensure that the branch’s monitoring system contains scenarios that can adequately apply changes in customer behavior and deviations from the branch’s knowledge of the customer to generate alarms, as well as to ensure that all transactions are covered by the monitoring system. 

The branch has been instructed to ensure that there is adequate monitoring of trade finance in the branch.

The branch has been instructed to ensure that the monitoring system’s model for automatic scoring and closing of alarms is used properly and on an adequate basis. The bank must also validate the model and ensure adequate control over decisions to automatically close alarms and examine and provide adequate documentation of the consequences of the failure to validate the model. 

The branch has also been instructed to ensure that the branch’s monitoring system covers the capital market area, including preparing business procedures for investigation, listing and notification of suspicious transactions in the capital market area. 

The branch has finally been ordered to ensure that notification to the Money Laundering Secretariat is made immediately if the branch is aware of, suspects or has reasonable grounds to suspect that a transaction, funds or activity has or has been linked to money laundering. or terrorist financing.

Link:

Inspection Statement

Categories: Anti-Money Laundering Finanstilsynet Updates Inspection Reports

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