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Denmark Wants EU to Play a Bigger Role Tackling Money Laundering

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The European Union should play a bigger role in helping national authorities fight money laundering, according to the government of Denmark.

Danish lawmakers are trying to figure out how the country’s biggest bank became a hub for financial crime after it emerged that billions in illicit funds were allegedly funneled from Russia, Moldova and Azerbaijan through a Danske Bank A/S unit in Estonia over a period of several years through 2014.

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Danske was severely reprimanded by the regulator in May, and told to add $800 million to its capital requirements to reflect the risks raised by its failures to comply with anti-money laundering rules. One executive left the bank and a former Danske chief financial officer, Henrik Ramlau-Hansen, stepped down as chairman of the financial regulator to be replaced by an academic. But the cross-border nature of the Danish-Estonian scandal has made it hard for authorities to handle the case.

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For that reason, Danish Business Minister Brian Mikkelsen says he thinks the EU needs more powers to track and investigate cross-border money laundering.

“It’s relevant to look into providing the EU with more competencies in this field,” he said. “Because it happens across borders and it’s difficult to be a national regulator, the way things are moved around.”

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Danish authorities stopped short of pressing criminal charges against Danske Bank or any members of its staff, citing a lack of evidence. That may change, pending the results of an internal investigation due later this year. The government has called the failings at the bank “unforgivable,” while the central bank and regulator said the scandal risks tainting Denmark’s reputation.

“I won’t comment on the specifics of the Danske case, but there’s no doubt that something happened in that case that prevented the exchange of information that could have been useful to the national authorities,” Mikkelsen said.

EU AML Efforts Under Way

- Member states are to set up national registers on real company ownership, data to become public and linked across the bloc
- Trust ownership will be revealed to regulators, financial intelligence units
- Member states will track real ownership of bank accounts
- Prepaid cards, anonymous electronic money restricted to online payments of less than 50 euros
- Electronic currencies like Bitcoin subject to EU AML rules
- Regulators, FIUs allowed to share suspicious data with other EU states without breaching confidentiality rules
- Source: European Commission December 2017 fact sheet

Denmark is planning to put more resources into fighting money laundering. Last year, rules were introduced that mean executives, also of non-financial firms, could go to jail for up to eight years if they’re found to have broken anti-money laundering laws.

Denmark is also implementing a new EU anti-money laundering requirement to create national financial intelligence units that will help regulators share data across borders. But for a small country like Denmark, challenges remain.

“The more cooperation in this field, the better,” Mikkelsen said.

— With assistance by Frances Schwartzkopff

(Updates with FSA chairman.)
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