Denmark Fails to Implement Effective Strategies Against Money Laundering and Terrorist Financing, Report Finds

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A recent assessment conducted by the Financial Action Task Force (FATF) has revealed that Denmark lacks a comprehensive national strategy to combat money laundering and terrorist financing. The report highlights several areas where Denmark needs to improve its implementation of measures to mitigate risks and strengthen its anti-money laundering and counter-terrorist financing (AML/CFT) regime.

Key Concerns

• Denmark does not have a modern money laundering offence in place, which criminalizes self-laundering.
• Almost all segments of the financial sector and many other businesses and professions covered by the FATF Standards are not adequately assessing or updating their risks related to money laundering and terrorist financing.

Weaknesses in Implementation

• Denmark’s implementation of measures to mitigate these risks is weak.
• Its risk-based approach to supervising financial institutions and designated non-financial businesses and professions (DNFBPs) needs fundamental improvements.
• The report recommends strengthening powers to enforce compliance and increasing supervisory action to ensure a more effective AML/CFT regime.

Positive Developments

• Denmark has achieved significant success in investigating and prosecuting terrorist financing cases, particularly through its international cooperation with Nordic and Baltic countries.
• However, the report urges Denmark to prioritize the investigation and prosecution of money laundering cases as well.

Government Response

• The Danish government has demonstrated its commitment to enhancing its AML/CFT regime by recently introducing legislative amendments aimed at detecting, preventing, and punishing money laundering and terrorist financing.
• The FATF encourages Denmark to ensure an effective implementation of these new legal provisions.

Conclusion

Overall, the report highlights that while Denmark has laid down a sound foundation for combating money laundering and terrorist financing, it needs to improve its implementation of measures to mitigate risks and strengthen its AML/CFT regime. By addressing these shortcomings, Denmark can better protect the integrity of its financial system and prevent illegal activities from exploiting its financial infrastructure.

Recommendations

• Strengthen powers to enforce compliance.
• Increase supervisory action to ensure a more effective AML/CFT regime.
• Prioritize the investigation and prosecution of money laundering cases.
• Ensure an effective implementation of new legal provisions.