Money laundering is a significant socio-economic challenge, and the Money Laundering Secretariat estimates that 68 billion Danish kroner are laundered annually in Denmark. This corresponds to approximately 11% of Denmark’s annual public expenditure, which finances, among other things, our healthcare system, education system, police, and defense.
The challenges posed by money laundering have led to an increased focus on combating it. Therefore, it is crucial for financial institutions to implement effective tools to comply with the relevant legislation.
“We are experiencing an extremely high willingness among our customers to comply with the current anti-money laundering legislation. However, it is complex, and it can be challenging to keep up with both technological and legislative developments while also struggling to keep up with criminals’ money laundering methods,” says Christoffer Nielsen, Head of Banking & Finance at the consulting firm Nobly.
From orders to fines
Currently, a Danish leasing company has received a multimillion-dollar administrative fine from the Financial Supervisory Authority for failing to meet the requirements of the anti-money laundering law. No money laundering was uncovered in the company, but the company’s controls and knowledge of its customers were insufficient and therefore did not comply with the anti-money laundering law. The fine serves as an example of the need to intensify efforts to ensure compliance with the legislation.
In addition, Jyske Bank was reported to the police by the Financial Supervisory Authority at the end of last year following an anti-money laundering inspection where significant deficiencies were identified. According to FinansWatch, the Financial Supervisory Authority rarely reports a bank for not complying with the anti-money laundering law. In their analysis, it has only happened eight times since 2015. In these cases, it involved bankrupt banks, quick loan providers, and currency exchange companies.
The findings from the inspection at Jyske Bank are similar to many other bank inspections where the Financial Supervisory Authority issues orders rather than fines. This is what Jakob Dedenroth Bernhoft, a lawyer and partner at the consulting firm Fraud React told FinansWatch in November last year. He believes that the police report is a sign that the Financial Supervisory Authority has become less patient:
“I can imagine that their patience is wearing thin because the authority has been working hard for a long time to raise banks’ awareness of this area,” Jakob Dedenroth Bernhoft told FinansWatch in November last year.
Requires decisive action
Effective solutions for compliance with anti-money laundering legislation are essential for financial institutions. According to Christoffer Nielsen, this is fundamentally about having a “license to operate.” If a company fails to comply with the legislation, it could ultimately result in the revocation of its banking license.
“The anti-money laundering legislation is now several years old, so it is remarkable if a bank still does not have a handle on its enforcement. There may, therefore, be an incentive for the Financial Supervisory Authority to increasingly move from issuing orders to imposing administrative fines and proceeding with police reports,” says Christoffer Nielsen.
Christoffer Nielsen further explains that as the years have passed and as implementations should have taken place in the country’s financial institutions, it is a natural progression for the Financial Supervisory Authority to increase the level of sanctions against the companies.
Effective handling of the anti-money laundering law
Nobly specializes in providing digital solutions for the handling of anti-money laundering legislation in financial institutions. The demand for Nobly’s solutions for anti-money laundering compliance is increasing. This indicates a growing need for efficient and user-friendly tools to ensure compliance with the rules.
“We have streamlined processes in several financial institutions, resulting in excellent business cases. We have saved our clients many working hours, and we receive nothing but positive feedback,” says Christoffer Nielsen.
With Nobly’s assistance, financial institutions can streamline their processes, reduce risks, and ensure that they play a crucial role in combating financial crime. Nobly contributes to creating a more transparent and secure financial system that benefits both businesses and society. Contact us today to learn how we can best assist you.
