Denmark’s Financial Supervisory Authority (FSA) is proposing greater independence and tougher qualifications for bankers hired to prevent money laundering.
In a newly released report, the regulator outlines a framework for required competence, experience and responsibilities of board members and key individuals in relation to anti-money laundering at financial institutions, mortgage banks, payment institutions and digital banks.
As reported by Frances Schwartzkopff in Bloomberg, “supervisory boards should be in routine, direct contact with the heads of their anti-laundering departments and that they alone should have the power to fire them. Top managers should have at least five years of experience combating laundering and shouldn’t have other responsibilities, to avoid potential conflicts of interest.”
The FSA report also includes a warning regarding smaller banks being particularly at risk of being exploited by money launderers during this transition phase, as large institutions strengthen their defences. More specifically, the regulator highlights that the criteria used to setting qualifications and requirements of employees responsible for preventing money laundering shouldn’t be impacted by a bank’s size. The focus should be on business models, including foreign activities.
According to Bloomberg, “the report also recommends that chief executives have at least 10 years of experience in their bank’s main area of activity”.
The Danish regulator’s new guidance in regards to what is expected of individuals responsible with preventing money laundering at financial institutions appears somehow in line with the overall trend for greater accountability of individuals across the EU, as exemplified by the Sixth Anti-Money Laundering Directive (AMLD6). In particular, the new iteration of the Directive focuses less on increasing transparency – which had been the main focus of AMLD4 & 5 – than on establishing minimum requirements for the definition of the crime of money laundering.
One of the countries that have already started legislative work to implement AMLD6 at a national level is Germany. According to an unofficial draft of the bill released at the end of January 2020, the new German legislation appears to extend the minimum requirements introduced by AMLD6 even further. As explained in detail by Daniel Travers and Marcel Michaelis on the Freshfields Bruckhaus Deringer website, “the draft bill contains multiple amendments to Germany’s criminal code, criminal procedure code (StPO) and the courts’ constitution act (GVG) which ‘enormously’ expand criminal liability for money laundering in Germany”.
The current deadline for EU member states to implement AMLD6 on a national level is 3 December 2020. On Thursday, June 11th, the European Court of Auditors also announced that it would start an audit of EU’s active measures against money laundering in the banking sector. The announcement came after the release of a new action plan on preventing money laundering and terrorism financing by the European Commission.
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