Financial Crime World

Title: FATF Report: Faroe Islands Face Increased Scrutiny Over Money Laundering and Financial Crime

Paris, August 7, 2017: FATF Evaluation of Denmark’s AML/CFT Regime

According to a recent assessment by the Financial Action Task Force (FATF), Denmark’s efforts to combat money laundering and terroristic financing have several areas for improvement, especially concerning the Faroe Islands (Fig. 1) [1]. The evaluation, which covered the entire Kingdom of Denmark including Greenland and the Faroe Islands, assessed the effectiveness and technical compliance of Denmark’s anti-money laundering and counter-terrorist financing (AML/CFT) regime.

Fig. 1: Location of the Faroe Islands [1]

Key Findings of the FATF Report

The FATF report brought forth several significant findings about Denmark’s AML/CFT regime:

  1. Lack of a National Strategy: Denmark currently does not have a nationwide strategy to counteract money laundering and terroristic financing, signifying the need for an independent and modern money laundering offense [1].

  2. Inadequate Risk Assessment: Money laundering and terroristic financing risks have not been efficiently assessed in various sectors of the financial industry and other businesses. The importance of updating and implementing effective risk mitigation strategies emphasizes this issue [1].

  3. Insufficient Regulations: Denmark must strengthen its legal framework by introducing a comprehensive set of regulations in line with the FATF Standards. This includes improving their enforcement mechanisms and increasing the frequency of supervisory actions [1].

  4. Strong Investigative Performance: Denmark has shown remarkable success in terrorist financing investigations and international cooperative efforts, particularly within the Nordic and Baltic regions. Similar focus and attention are required to combat money laundering [1].

  5. Ongoing Commitment and New Laws: Recent legislative amendments passed by Denmark demonstrate their dedication to improving their AML/CFT regime, with a renewed focus on detecting, preventing, and punishing such activities [1].

Recommendations from the FATF Report

The FATF report offers recommendations for Denmark to address these concerns and fortify its approach to combating money laundering and terroristic financing:

  1. Develop and implement a national strategy to counteract money laundering and terroristic financing, which includes updating and enhancing preventive measures.
  2. Conduct thorough and regular risk assessments in sectors of the financial industry and other businesses.
  3. Enhance their legal framework by introducing necessary regulations and empowering authorities to effectively enforce compliance.
  4. Increase the frequency of supervisory actions to deter and prevent financial crimes.
  5. Implement new laws effectively by providing adequate resources, including training, to key stakeholders [1].

Conclusion

The FATF report, which was adopted at their Plenary meeting in June 2017, calls upon Denmark to take specific measures to address these concerns and strengthen its approach to preventing money laundering and terroristic financing, with a particular emphasis on the Faroe Islands. By adhering to these recommendations, Denmark will ensure the integrity of its financial system and contribute to the global efforts to prevent financial crime.

References: [1] Financial Action Task Force. (2017). Mutual Evaluation Report - Denmark. FATF. Retrieved from https://www.fatf-gafi.org/media/2087486/denmark-mutual-evaluation-report.pdf.