WHAT ARE THE
Money laundering and terrorism financing laws in Denmark?
In Denmark, money laundering and terrorism financing are strictly regulated by the following laws:
- The Danish Act on Measures to Prevent Money Laundering and Financing of Terrorism (Act No. 651 of 8 June 2017): This Act, commonly referred to as the Danish Anti-Money Laundering Act, provides the legal framework for preventing money laundering and financing of terrorism. The Act prescribes obligations for various entities to conduct due diligence and report suspicious transactions.
- The Danish Act on Financial Stability (Act No. 1050 of 10 July 2020): This Act sets out measures for maintaining financial stability and contains provisions for the establishment of the Financial Stability Company, which is charged with the task of managing and preventing financial crises, including those related to money laundering and terrorism financing.
- The Danish Act on Terrorist Financing (Act No. 378 of 6 June 2002): This Act criminalizes the financing of terrorism and provides mechanisms for freezing assets of individuals and entities suspected of terrorism.
These laws, along with the regulations and guidelines issued by the Danish Financial Supervisory Authority, form the basis of Denmark's anti-money laundering and counter-terrorism financing regulatory framework.
WHAT ARE THE
Key obligations reporting entities have under Danish laws?
In Denmark, reporting entities are obligated to fulfill several key requirements under the Danish Act on Measures to Prevent Money Laundering and Financing of Terrorism (Act No. 651 of 8 June 2017) and other related laws. These obligations include:
- Risk Assessment: Reporting entities are required to conduct risk assessments to identify and assess the risk of money laundering and terrorism financing associated with their business.
- Customer Due Diligence (CDD): Entities must establish and maintain procedures for CDD to verify the identity of their customers and understand the nature of their business. This includes enhanced due diligence for high-risk customers and simplified due diligence for lower-risk customers.
- Transaction Monitoring: Reporting entities are required to monitor transactions and business relationships to identify any unusual or suspicious activities that may suggest money laundering or terrorism financing.
- Suspicious Transaction Reporting (STR): If a reporting entity suspects or has reasonable grounds to suspect that funds are the proceeds of a criminal activity, or are related to terrorism financing, it must promptly report the suspicious transactions to the Danish Financial Intelligence Unit (FIU).
- Record Keeping: Entities must keep records of all transactions and documents obtained through the CDD process for at least five years. This is to ensure that these records can be provided to the Danish FIU or other competent authorities when required.
- Internal Policies, Controls, and Procedures: Reporting entities must establish and implement internal policies, controls, and procedures to prevent, detect, and report money laundering and terrorism financing.
- Staff Training: Entities must provide ongoing training to their staff to ensure that they understand AML/CTF laws and are able to identify suspicious activities.
WHO ARE THE
ML/TF regulators in Denmark and what functions do they perform?
In Denmark, the regulation of money laundering and terrorism financing is primarily overseen by two main bodies:
- Financial Supervisory Authority (Finanstilsynet): The FSA is the main regulatory body for financial institutions in Denmark. It is responsible for ensuring that banks and other financial institutions comply with the Danish Anti-Money Laundering Act and other relevant regulations. They must also ensure that these institutions have adequate systems and controls in place to detect and prevent money laundering and terrorism financing.
- State Prosecutor for Serious Economic and International Crime (SØIK): Also known as the Fraud Squad, the SØIK is responsible for investigating and prosecuting cases of serious economic crime, including money laundering and terrorism financing.
Additionally, the Danish Tax Agency (Skattestyrelsen) plays a role in combating money laundering and terrorism financing, particularly by monitoring and investigating tax evasion and fraud, which are often linked to money laundering.
WHAT ARE THE
Industry sectors subject to ML/TF regulations?
In Denmark, the following industry sectors are primarily regulated under Anti-Money Laundering and Counter-Terrorism Financing (AML/CTF) laws:
WHAT ARE THE
Penalties for non-compliance with AML/CTF laws?
In Denmark, failure to comply with Anti-Money Laundering (AML) and Counter-Terrorism Financing (CTF) laws can result in severe penalties. Under the Danish Anti-Money Laundering Act, these penalties can include:
- Fines: The amount of the fine is typically determined by the scope and severity of the violation, and whether the violation was committed intentionally or due to gross negligence. In severe cases, the fine can be up to double the amount obtained through the illegal activity or planned to be obtained.
- Imprisonment: In particularly serious cases, violations can result in prison sentences of up to two years.
- Business Restrictions: In some cases, the authorities may withdraw a business's license or prohibit it from carrying out certain activities.
Penalties can be imposed on both the company as a whole and on the individuals involved, including members of the management and employees.
WHAT ARE THE
Largest fines for non-compliance with AML/CTF laws?
The largest fines for non-compliance with AML/CTF laws in Denmark include:
- Danske Bank: Danske Bank, Denmark's largest bank, was fined over $2 billion for defrauding investors. This penalty was the result of an investigation conducted by the US Department of Justice (DoJ) and other regulatory bodies.
- Credit Suisse: Credit Suisse, the second largest bank in Switzerland, accepted to pay €238 million ($234 million) for the settlement of an investigation conducted by French authorities. The bank was involved in a scheme to help clients evade declaring certain assets to the French government.
- USAA FSB Bank: USAA Federal Savings Bank (USAA FSB) received a $140 million fine from the Financial Crimes Enforcement Network (FinCEN) for willful violations of the Bank Secrecy Act (BSA) and failures in implementing AML regulatory requirements.
- Santander Bank UK: Santander Bank of the UK was fined GBP 107.7 million ($132 million) by the UK's Financial Conduct Authority (FCA) for repeated failures in complying with AML laws. The bank had insufficient customer identity verification systems and KYC procedures.
- National Bank of Pakistan: The National Bank of Pakistan (NBP) was charged with failures and violations of AML regulations, resulting in fines of $55 million by the Federal Reserve and the New York State Department of Financial Services (NYDFS).
These fines demonstrate the increasing focus and severity of penalties for non-compliance with AML/CTF laws in Denmark and globally. Financial institutions are being held accountable for deficiencies in their AML systems and processes, and regulators are taking stronger actions to combat financial crimes.