Statement of inspection in Merex International A / S (money laundering area)
In January 2018, the Danish FSA was at the money laundering inspection of Merex International A / S. The inspection included the company’s customer knowledge procedures, risk assessment as well as the company’s policy, procedures and controls in the area of money laundering. The inspection only dealt with the company’s money transfer activities.
Risk assessment and summary
Merex International A / S has a limited license to conduct money transfer business in Denmark. The company’s business model consists primarily of transferring money abroad. The company has its own IT system for registering customers, while in practice the money transfers are made by the fact that the company has a partner in individual countries, with which a regular settlement is made. In addition, the company offers currency exchange and is an agent of Western Union. In addition to the Copenhagen office, Merex International A / S cooperates with a similar company in Sweden.
Money transfer business (non-banking) is generally considered to have a significant risk of being exploited for money laundering or terrorist financing. In addition, Merex International A / S transfers money to and from countries that the FSA considers to have insufficient anti-money laundering and terrorist financing rules. It is therefore the opinion of the Danish Financial Supervisory Authority that Merex International A / S’s inherent risk of being abused for money laundering and terrorist financing is high.
In the course of the inspection, the Danish FSA found that the company does not have a risk assessment in the area of money laundering. Against this background, the company was instructed to prepare a risk assessment which identifies and assesses the risk of the company being abused for money laundering and terrorist financing.
In addition, the FSA found that the company does not have a policy in the area of money laundering. The company was therefore instructed to develop a policy in the area of money laundering, in which it determines how the risks identified in the risk assessment must be managed.
At the inspection, the Danish FSA reviewed a number of the company’s money transfer customers from December 31, 2016 to December 31, 2017.
Based on the review, the Danish Financial Supervisory Authority found that, in one case, the company had not performed sufficient customer knowledge procedure on a corporate customer prior to the money transfer. The company has not sufficiently obtained identity information on the customer’s real owners and has not clarified the ownership structure.
The company was therefore notified that in the specific case, insufficient customer knowledge procedure had been carried out and an injunction to investigate whether there was a suspicion or reasonable reason to suspect that the money transfer was or was linked to money laundering or terrorist financing. If a suspicion is identified, the company must notify the Money Laundering Secretariat of the State Attorney for Special Economic and International Crime (SØIK) of the money transfer.