Title: Faroe Islands and Greenland Gain EU Financial Compliance Status With Danish Agreement
EU Commission Approves Deal for Denmark to Transfer Funds to Faroe Islands and Greenland
Brussels, Belgium - The European Commission has approved a deal, allowing Denmark to transfer funds between the European Union (EU) member state and the Faroe Islands and Greenland. This move brings both territories in line with the EU’s financial compliance regulations.
Implementation Decision: Treating Transfers as Domestic
The European Commission’s implementation decision, dated January 25, 2012, permits Denmark to sign agreements that will treat these transfers as if they were occurring within Denmark. The agreements adhere to Regulation (EC) No 1781/2006 on the information on the payer accompanying transfers of funds.
Danish Application for Derogation: Permanent Arrangement
Since December 2006, transfers of funds between Denmark and the Faroe Islands and Greenland have been provisionally treated as domestic transfers under the regulation. Denmark submitted an application for derogation under Article 17(1) of Regulation (EC) No 1781/2006 in April 2011.
Factors Considered by the Commission
The Commission carefully considered several factors before granting the derogation:
- Adherence to EU regulations
- Payment service providers’ involvement in Danish systems
- Anti-money laundering regimes
Compliance with Regulation (EC) No 1781/2006
Both territories share the Danish currency and are part of Denmark’s Single Euro Payments Area (SEPA). Payment services providers in the Faroe Islands and Greenland operate directly in Danish payment and settlement systems, Kronos and Sumclearing.
- EU membership not required (Article 17(1)(a)): The Faroe Islands and Greenland comply with the criterion of “a Member State or a territory of a Member State.”
- Operating in Danish payment systems (Article 17(1)(b)): Both territories’ payment services providers operate in Danish payment systems, ensuring compliance.
- Anti-money laundering regimes (Article 17(1)(c)): These countries have established effective anti-money laundering regimes.
Conditions and Compliance
The European Commission granted Denmark the requested derogation on January 25, 2012. Denmark’s agreements with the Faroe Islands and Greenland must adhere to Directive 95/46/EC on the protection of individuals regarding the processing of personal data and on its free movement.
Following is the summary of the conditions met by Denmark and the Faroe Islands/Greenland:
- Compliance with EU regulations
- Involvement of payment service providers in Danish payment and settlement systems
- Greenland’s Sumclearing
- Faroe Islands’ Kronos
- Established anti-money laundering regimes
- Imposition of penalties on entities or individuals listed by the United Nations or European Union
European Commission’s Opinion
The European Commission’s decision aligns with the opinion of the Committee on the Prevention of Money Laundering and Terrorist Financing.