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Denmark Moves to Enhance Anti-Money Laundering and Combating Financing of Terrorism Efforts
Copenhagen, Denmark - In a bid to strengthen its anti-money laundering (AML) and combating financing of terrorism (CFT) measures, the Danish Financial Supervisory Authority (DFSA) is set to establish a risk-based approach to supervision.
Modelled on UK’s Joint Money Laundering Intelligence Task Force
The move is modeled on the United Kingdom’s Joint Money Laundering Intelligence Task Force (JMLIT), which was established in 2016. The DFSA has allocated significant resources to implement this new approach, which will allow it to prioritize its supervisory activities based on assessed ML/TF risks at the national, sectoral, and institutional levels.
Progress Made in Assessing ML/TF Risks
According to a recent report by Finance Denmark, the DFSA has made significant progress in assessing ML/TF risks. In January 2020, the Danish Ministry of Justice (MLS) published an English-language translation of the summary and methodology of Denmark’s 2018 ML National Risk Assessment (NRA). The MLS also provided an English-language translation of the full NRA to all reporting entities.
Identifying and Mitigating Cross-Border Risks
The report highlights the importance of identifying and mitigating cross-border risks to safeguarding financial integrity in Denmark. To achieve this, the DFSA has issued a Danish-language translation of the EU’s 2019 supranational ML/TF risk assessment.
Next Steps for Enhanced AML/CFT Supervision
In order to further enhance its AML/CFT supervision, the DFSA is proposing several next steps:
- Actively solicit feedback from supervised entities on the accuracy and value of Denmark’s 2018 ML NRA and the EU’s 2019 supranational ML/TF risk assessment.
- Continue to conduct risk-based AML/CFT supervision, focusing on key areas such as governance, risk management, compliance, and transaction monitoring.
Development of Institutional Risk Assessment Model
The report also highlights the DFSA’s efforts to develop an institutional risk assessment model, which will allow it to assess the risks posed by individual financial institutions. The model is expected to be fully deployed by the beginning of 2021 and will require significant consultations with the private sector, as well as testing and validation using data provided by a vanguard group of banks.
A Major Step Forward in Combating Money Laundering and Terrorist Financing
The move towards a risk-based approach to AML/CFT supervision is seen as a major step forward in Denmark’s efforts to combat money laundering and terrorist financing. It is expected to enhance the efficiency and effectiveness of the country’s supervisory authorities, while also reducing the regulatory burden on financial institutions.
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