Financial Crime World

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Denmark’s Regulatory Bodies Crack Down on Financial Crime Prevention: What Firms Need to Know

In the wake of a major banking scandal that saw €200 billion flow through eastern European branches, Denmark is prioritizing anti-money laundering (AML) and counter-terrorism financing (CFT) compliance. The Financial Supervisory Authority (FSA), also known as Finanstilsynet, is at the forefront of this effort.

Background

Established in 1988, the FSA oversees banks, insurance companies, pension funds, investment funds, and securities brokers to ensure financial stability and confidence in Denmark’s financial institutions. As part of its AML/CFT mandate, the FSA sets rules, best practices, and provides guidance to firms operating in Denmark.

The Act on Preventive Measures Against Money Laundering and the Financing of Terrorism

The Danish government has enacted the Act on Preventive Measures Against Money Laundering and the Financing of Terrorism, which requires all financial institutions to develop and implement a risk-based AML/CFT compliance solution. This includes:

  • Customer due diligence
  • Transaction screening
  • Sanctions checks
  • Appointing an AML Officer responsible for overseeing their organization’s compliance

EU Directives and Denmark’s Strategy

Denmark has transposed the EU’s anti-money laundering directives (AMLD) into domestic legislation. However, it has not yet implemented the EU’s Sixth Anti-Money Laundering Directive (6AMLD), which came into effect in June 2021.

The Danish government has announced a five-pillar AML/CFT strategy to combat money laundering, focusing on high-risk areas such as:

  • High-value goods
  • Money transfer companies
  • Cryptocurrencies
  • The gambling industry

The strategy includes a new police unit dedicated to tackling money laundering.

Compliance Requirements for Firms Operating in Denmark

Firms operating in Denmark must ensure they comply with EU and Financial Action Task Force (FATF) guidelines by implementing risk-based AML/CFT solutions that reflect their level of criminal risk. This includes:

  • Customer due diligence
  • Transaction screening
  • Sanctions checks
  • Adverse media screening

The Importance of Adverse Media Screening

Finanstilsynet’s risk management guidelines emphasize the need to include media screening in customer due diligence, as it can reveal a customer’s involvement in financial crime or designation on a watchlist before official confirmation.

Ripjar’s Labyrinth Screening Platform

Ripjar’s Labyrinth Screening platform is designed to help firms meet their compliance obligations in complex regulatory environments. Powered by AI and machine learning software, Labyrinth enables global customer screening of thousands of news sources, sanctions lists, and watchlists, delivering accurate and actionable data in real-time.

Conclusion

As Denmark continues to prioritize AML/CFT compliance, firms must ensure they are equipped with the necessary tools and expertise to meet their obligations. By implementing risk-based solutions that include adverse media screening, firms can reduce the risk of financial crime and protect their reputation.