Financial Crime World

Denmark’s Anti-Money Laundering and Counter-Terrorist Financing Efforts Fall Short

A recent assessment has revealed that Denmark’s efforts to combat money laundering (ML) and terrorist financing (TF) have been marred by a lack of coordination, inadequate analysis, and limited resources.

Methodological Deficiencies in Money Laundering National Risk Assessment

  • The report found that Denmark’s Money Laundering National Risk Assessment (ML NRA) suffered from methodological deficiencies, failing to include input from the private sector.
  • Industry experts deemed the assessment irrelevant, highlighting the need for a more comprehensive approach.

Limited Resources and Inadequate Statistics

  • Denmark lacks comprehensive statistics on the effectiveness and efficiency of its anti-money laundering systems.
  • The Financial Intelligence Unit (FIU) prioritizes analysis related to ongoing investigations rather than identifying new ML/TF cases.

Lack of Coordination and Strategy

  • There is no national anti-money laundering and counter-terrorist financing strategy in place, leading to individual authorities prioritizing their own initiatives rather than working together.
  • Coordination between authorities is largely informal, but efforts are underway to formalize this process.

Inadequate Risk-Based Actions

  • While some risk-based actions have been taken in response to the ML NRA, they are limited and variable, failing to adequately address identified risks.
  • The Danish Security and Intelligence Service (PET) has a general understanding of TF risks, but these are not integrated into policies related to preventive measures.

Concerns about the Financial Intelligence Unit

  • The FIU transmits reports directly to Denmark’s domestic intelligence agency without adequate analysis.
  • Concerns have been raised about the diminishing human resources of the FIU and its impact on the quality of analysis.
  • Denmark criminalizes money laundering through a handling of stolen goods offense that extends to all criminal proceeds, but this does not cover self-laundering.
  • The maximum penalty for ordinary ML is 1.5 years’ imprisonment, which is considered disproportionate and insufficiently dissuasive.

Positive Developments

  • Denmark has a robust legal framework for investigating and prosecuting terrorist financing, with a substantial level of effectiveness.
  • However, the country’s application of sanctions is limited by lenient penalties, which reduces their dissuasiveness.

Conclusion

  • The report concludes that while Denmark has made progress in combating ML/TF, its efforts are hindered by a lack of coordination, inadequate analysis, and limited resources.
  • To improve its anti-money laundering and counter-terrorist financing regime, Denmark must address these shortcomings and prioritize cooperation between authorities.