Statement on inspection in Saxo Bank A / S (money laundering area)
In September 2021, the Danish Financial Supervisory Authority inspected Saxo Bank A / S. The inspection was an investigation of the money laundering area. The inspection included the bank’s customer due diligence procedures, the bank’s acquisition of the Dutch investment bank BinckBank and the bank’s internal controls in the area.
Risk assessment and summary
Saxo Bank (the bank) is a global investment bank headquartered in Hellerup. The bank has a large international presence, where the bank is represented with subsidiaries, branches and representative offices in 16 countries, from where the bank serves customers from 98 countries, and where the bank’s trading and investment platforms are available in 28 different languages.
Saxo Bank specializes in online trading and investing in the international capital markets through the bank’s online trading platforms. The bank offers trading in, among other things, currencies, equities, CFDs, options, futures, ETFs and bonds. The trading platform is made available to the bank’s direct customers as well as indirect customers via one of the bank’s wholesale partners, so-called White Label Clients (WLCs). Furthermore, the bank collaborates with partners called “introducing brokers” (IB) and “money managers” (MM), who refer customers to use the bank’s trading platform. These customers are onboarded directly in the bank and are considered direct customers.
In 2019, Saxo Bank took over the Dutch investment bank BinckBank. Like Saxo Bank, BinckBank offers investment solutions to investors through investment platforms. In addition to the company in the Netherlands, BinckBank has subsidiaries in France, Belgium and Italy, which the bank has also taken over.
It is the Danish FSA’s assessment that the bank’s inherent risk of being used for money laundering or terrorist financing is highly assessed in relation to the average of financial companies in Denmark. In this assessment, special emphasis is placed on the bank being represented globally, including in several high-risk third countries, while at the same time the vast majority of the bank’s customers are remote customers who are onboarded digitally. The assessment also emphasizes that the bank’s White Label Clients (WLCs) are associated with high risk. The WLCs are securities dealers such as local banks or foreign institutional clients who offer the bank’s online trading platforms to their own clients. The high risk is that the bank’s indirect customers via a WLC must only be known by the WLC itself, and not by the bank itself,
Based on the inspection, there are areas that give rise to supervisory reactions.
The bank has been instructed to carry out adequate customer due diligence procedures, including updating and updating customer due diligence information on the bank’s customers in particular with a joint account and the bank’s IB and MM customers. The bank must also ensure that the update of customer relationships is completed within a reasonable time after the update of the customer relationship has begun.
The bank has been instructed to have adequate methods and procedures in place for the bank’s compliance function that are suitable for detecting and reducing the risk of the bank’s non-compliance with money laundering legislation, including in particular in relation to the bank’s subsidiaries and branches.