Finanstilsynet Updates

Report on inspection in Nokas Værdihåndtering A / S (whitewash area)

The Danish FSA was in March 2019 an inspection at Nokas Værdihåndtering A / S. The inspection was a study of the money laundering area as part of the ongoing supervision of the company. The inspection included company compliance with the rules on customer knowledge, monitoring, investigation, notification and listing. 

Summary and risk assessment

The company is authorized for currency exchange.

The company’s purpose is to carry out transport and security activities and related business, including currency exchange activities. The company only has business customers, primarily banks and retail companies, who need to exchange exchange rates and travel currency. 

The Danish Financial Supervisory Authority considers that the company’s inherent risk of being abused for money laundering or terrorist financing is highly assessed in relation to the average of financial companies in Denmark. In the assessment, the Danish FSA has placed particular emphasis on the fact that currency exchange activities are generally considered to have a high inherent risk of being used for money laundering or terrorist financing.

The company is instructed to ensure that it identifies corporate customers and obtains identity information on real-estate owners, as well as checks on the information.

In addition, the company is charged with not having recorded and retained the results of examinations of unusual or suspicious transactions before December 2018. 

Link:

Finanstilsynet Inspection Report

Report on inspection in Aalborg Money Exchange ApS (the laundry area)

The Danish Financial Supervisory Authority was in February 2019 on inspection at Aalborg Money Exchange ApS. The inspection was a study of the money laundering area as part of the ongoing supervision of the company. The inspection included company compliance with the rules on customer knowledge, monitoring, investigation, notification and listing.

Summary and risk assessment

The company is authorized for currency exchange. In addition, the company is a money transfer agent for Western Union.

The company’s business model, for the part of the company that is linked to currency exchange, consists mainly of currency exchange for private persons who are going to use foreign currency for foreign travel and for people who are staying as tourists in Aalborg. 

The Danish Financial Supervisory Authority considers that the company’s inherent risk of being abused for money laundering or terrorist financing is high in relation to the average of financial companies in Denmark. In the assessment, the Danish FSA has placed particular emphasis on the fact that currency exchange activities are generally considered to have a high inherent risk of being used for money laundering or terrorist financing.

The Danish FSA did not find it necessary to give any reactions to the money laundering area.

Link:

Finanstilsynet inspection report

Report on inspection in Exchange Kolding v / Mashal Imami (the laundry area)

In February 2019, the Danish FSA was on inspection in Exchange Kolding v / Mashal Imami.

The inspection was a study of the money laundering area as part of the ongoing supervision of the company. The inspection included company compliance with the rules on customer knowledge, monitoring, investigation, notification and listing.

Risk assessment and summary 

The company is authorized for currency exchange. In addition, the company is a money transfer agent for Western Union.

The company’s business model, for the part of the company that is linked to currency exchange, consists mainly of currency exchange for private persons who are going to use foreign currency for foreign travel and for people who are staying as tourists in Kolding.

The Danish Financial Supervisory Authority considers that the company’s inherent risk of being abused for money laundering or terrorist financing is high in relation to the average of financial companies in Denmark. In the assessment, the Danish FSA has placed particular emphasis on the fact that currency exchange activities are generally considered to have a high inherent risk of being used for money laundering or terrorist financing.

The Danish FSA did not find it necessary to give any reactions to the money laundering area.

Link:

Finanstilsynet notice

Leadership must increase focus on money laundering rules

The managers of the financial companies generally do not have enough focus on what they have to do to prevent companies being used for money laundering or terrorist financing. This is the conclusion of the Danish FSA on the basis of 55 money laundering inspections from mid-2017 to the end of 2018. Also in several other areas, the companies must improve.

The vast majority of companies are aware of the risk of being used for money laundering and terrorist financing. But the managers often do not have enough focus on what they in practice have to do for the companies to live up to the money laundering rules. The Danish Financial Supervisory Authority writes in a newsletter prepared on the basis of 55 implemented money laundering inspections from mid-2017 to the end of 2018.

“It is the management’s task to thoroughly assess how the company in question can be abused for money laundering or terrorist financing. If the management does not make the right decisions, there is a risk that the company does not meet the requirements of the money laundering legislation, and that it is actually used for money laundering or terrorist financing, ”says Head of Unit Stig Nielsen from Finanstilsynet.

Based on the risk assessment, the management must decide on the company’s organization, staffing, systems and procedures in relation to preventing money laundering and terrorist financing. Management must also ensure effective internal control, writes Finanstilsynet.

Eight typical offenses

In the newsletter, the Danish Financial Supervisory Authority describes the eight types of breaches of the money laundering legislation, which most often have resulted in orders or other supervisory reactions in connection with the 55 inspections:

  • Tasks are not performed on a risk-based basis.

  • Risk assessments are not sufficient. 

  • Policies are not sufficiently operational.

  • Procedures are not sufficiently worked out.

  • Customer knowledge procedures are not sufficient.

  • Customers and transactions are not adequately monitored.

  • Correspondent banks are not sufficiently assessed.

  • Functional separation is not sufficient.

About the supervision of money laundering rules

Since mid-2017, the Danish Financial Supervisory Authority has significantly strengthened its efforts in the field of money laundering in connection with the fact that the Danish Parliament has provided more resources for the money laundering authority. Most recently, a political majority in March 2019 entered into a settlement on strengthening the efforts against financial crime, where the Danish FSA was strengthened with more resources and competencies to solve the tasks. The Danish FSA carries out money laundering supervision with a total of approx. 1500 companies.

The Danish Financial Supervisory Authority supervises whether the companies comply with the statutory requirements, in particular that they know the customers and monitor the customers’ transactions. The audit must thus primarily ensure that the companies fulfill their obligations with regard to the prevention of money laundering and terrorist financing. The investigation of any cases of money laundering is the task of the police.

The Danish Financial Supervisory Authority expects to carry out 35 money inspections in 2019 and to follow up on the inspections from 2018. The Danish Financial Supervisory Authority will regularly inform about the overall conclusions of the inspections.

Links:

Finanstilsynet Notice

Danish FSA Newsletter

Report on inspection in Sparekassen Sjælland-Fyn A / S (whitewash area)

In June 2018, the Danish FSA was inspected by Sparekassen Sjælland-Fyn A / S. The inspection was a study of the money laundering area as part of the ongoing supervision of the bank.

The inspection included the bank’s risk assessment, policies, procedures and internal controls as well as customer knowledge procedures, including surveillance of private customers and corporate customers.

Risk assessment and summary

Sparekassen’s business model is based on being a significant bank in its local area for private customers, small and medium-sized enterprises, public institutions, cultural institutions and leisure associations. The savings bank limits its business to basic and simple products and does not have complex or speculative financial products.

The Danish Financial Supervisory Authority considers that the savings bank’s inherent risk of being abused for money laundering or terrorist financing is normal to high in relation to the average of financial companies in Denmark. In the assessment, special emphasis has been placed on the Savings Bank offering a number of financial products for both private customers and corporate customers. Conversely, Sparekassen restricts its business to traditional financial products and primarily takes its starting point in its local area with customers who are resident in Denmark.

Sparekassen has added additional resources to the money laundering area and initiated a money laundering project, which focuses on several areas, including onboarding of corporate customers.

On the basis of the inspection, however, there are a number of areas that give rise to supervisory reactions.

The Danish Financial Supervisory Authority found that the Savings Bank’s risk assessment does not adequately contain a documented analysis of the Savings Bank’s risk factors and does not adequately address the risk that the Savings Bank will be abused for financing terrorism. On this basis, the savings bank is ordered to revise the risk assessment accordingly.

In addition, the Savings Bank is required to revise its money laundering policy so that it clearly identifies and delimits the risks the Savings Bank wishes to assume in the money laundering area.

The savings bank also receives an order to ensure that adequate customer knowledge procedures are implemented for all customers, including obtaining information on purpose and intended nature regarding the customer relationship for all customers, as well as obtaining information on real owners for all corporate customers.

In addition, the Savings Bank is required to ensure that the information on purpose and intended nature can be used by the Savings Bank’s electronic surveillance.

In addition, the Savings Bank is required to obtain documentation for customers’ information in connection with investigating suspicious transactions.

Finally, the Savings Bank is instructed to ensure that there is the necessary independence between its compliance function and the money laundering officer, including that there is no personal association between the Savings Bank’s compliance manager and the money laundering employee.

Link:

Finanstilsynet Notice

Report on inspection in Capitolia ApS (the laundry area)

The Danish Financial Supervisory Authority was in May 2018 an inspection of the money laundering area in Capitolia ApS. The inspection included the company’s risk assessment, policies, procedures and internal controls as well as customer knowledge procedures, including monitoring of private customers.

Risk assessment and summary 

The company offers smaller consumer loans to private customers through the websites kronelån.dk and simbo.dk. The company does not offer other products and is only present in Denmark. 

The Danish Financial Supervisory Authority considers that the company’s inherent risk of being abused for money laundering or terrorist financing is normally assessed in relation to the average of financial companies in Denmark. In the assessment, particular emphasis has been placed on the company offering a simple financial product and that the product is only offered to private customers resident in Denmark. Conversely, the company’s customer portfolio consists solely of distance customers.

 

Based on the inspection, a number of supervisory reactions have been given.

 

The Danish FSA concluded that the company’s risk assessment does not adequately identify and assess the inherent risk of it being misused for money laundering or terrorist financing. In particular, the company lacks the risk of being abused for the financing of terrorism. The company is therefore instructed to revise its risk assessment.

 

The company is instructed to prepare a money laundering policy, as the company has not prepared such a policy and thus has not set the framework for the company’s risks or the overall strategic objectives for preventing money laundering and terrorist financing for the company’s identified risks.

 

The company is instructed to revise its procedures so that they are based on the company and reflect the actual work procedures.

 

Finally, the company is instructed to ensure that the company’s money launderer approves the establishment and continuation of business relationships with politically exposed persons, their related and close business partners.

Link:

Finanstilsynet Notice

Report on inspection in the Danish branch of SEB Kort Bank AB (the laundry area)

In March 2018, the Danish FSA was inspected by the Danish branch of SEB Kort Bank AB. 

The inspection was a study of the money laundering area as part of the ongoing supervision of the branch. The inspection included the branch’s procedures and internal controls as well as customer knowledge procedures, including monitoring of private customers and business customers.

Risk assessment and summary

SEB Kort Bank AB is a 100% owned subsidiary of SEB AB, which is domiciled in Sweden. SEB Kort Bank AB has established a Danish branch, which offers payment and credit cards to private customers and business customers.

The Danish Financial Supervisory Authority considers that the inherent risk of the branch being abused for money laundering or terrorist financing is normal to high in relation to the average of financial companies in Denmark. In the assessment, special emphasis has been placed on the fact that the branch’s offered products can be used for money transfers, and that the branch’s customer portfolio consists solely of distance customers.

Based on the inspection, there are a number of areas that give rise to supervisory reactions.

The branch is ordered to ensure that its stricter customer knowledge procedures entail that the branch obtains additional information about customers that the branch considers to be associated with a high risk of money laundering or terrorist financing. 

The branch is instructed that it should assess when it is relevant to identify the purpose and purpose of a business relationship, since the Danish FSA concluded that the branch does not make a concrete assessment of this.  

The branch is ordered to ensure that the transaction monitoring is adapted to the branch’s knowledge of the individual customer, including the customer’s risk profile and expected business volume. 

Finally, the branch is ordered to ensure that sufficient controls are carried out in the operating units as to whether the branch complies with the requirements of the Money Laundering Act. The order is based on the fact that the branch’s internal controls are primarily performed by compliance and internal audit. 

Link:

Finanstilsynet Notice