Terrorism Financing Laws in Faroe Islands Receive EU Nod
The European Commission has given its approval for Denmark to conclude agreements with Greenland and the Faroe Islands regarding transfers of funds between the countries. This move aims to treat these transactions as domestic, rather than international, money transfers.
Background
On January 25, 2012, the Kingdom of Denmark submitted an application to derogate from Regulation (EC) No 1781/2006 on information on the payer accompanying transfers of funds. The regulation requires countries to apply specific rules for international money transfers to prevent terrorism financing and money laundering.
Provisional Treatment
Greenland and the Faroe Islands were provisionally treated as part of Denmark’s territory since December 2006, with payment services providers in both territories participating directly in Danish payment systems. Both regions have also incorporated provisions similar to those of Regulation (EC) No 1781/2006 into their own legal orders.
Anti-Money Laundering Measures
The Commission found that Greenland and the Faroe Islands had implemented adequate anti-money laundering legislation, which contributes to a sound regime against money laundering and terrorism financing. The regions’ laws also impose financial penalties on entities or persons listed by the United Nations or the European Union.
- Both territories have adopted rules similar to those established under Regulation (EC) No 1781/2006, requiring payment services providers to apply them.
- This fulfills the criterion set out in Article 17(1)(c) of the regulation.
Derogation and Personal Data Protection
The Commission has granted Denmark the requested derogation and requires the agreements between Denmark and Greenland to ensure compliance with Directive 95/46/EC on personal data protection and free movement of such data.
Impact
The move is seen as a step towards strengthening anti-money laundering measures in the Faroe Islands, which have been criticized for their lack of transparency in the past. This development aims to provide greater clarity and oversight over financial transactions between Denmark, Greenland, and the Faroe Islands.