Denmark is an excellent example of the Nordic Model, designated by an internationally high tax level and a correspondingly high level of government-provided services and income transfers to various groups like disabled people, retirees, unemployed persons, and students. Because Denmark is an EU member, Danish legislation and regulations conform to EU standards on almost all issues. Denmark is one of the strongest supporters of trade liberalization.
Overview of Money Laundering in Denmark
Denmark is not a country with serious cases of financial crimes. Therefore, we cannot say that there are many risks of money laundering in the country. In addition, there are no trade-based money laundering activities in Denmark, and there is almost no public corruption. Besides, Denmark is geographically vulnerable to serving as a transit country for smuggling, just like Norway.
Foreign criminal activities generally cause money laundering activities in Denmark, and the foreign crimes mentioned here are related to the trafficking of illegal drugs such as cocaine and heroin. According to the Danish Special Crimes Unit, money laundering techniques can be used to launder the revenues of theft, tobacco smuggling, robbery, and human trafficking. In Denmark, illegal money transfers and foreign exchange services are commonly used to launder funds from this drug trafficking.
Bribery & Corruption
Denmark is one of the world’s least corrupt countries, and bribery and other corrupt practices are not considered business obstacles. The rating of transparency International Corruption Index is 87/100, and the world Governance Indicator - Control of Corruption is 99/100, which is pretty amazing! The Danish Criminal Code forbids active and passive bribery in international anti-corruption conventions. Safeguards against corruption and abuse of power primarily rest with a healthy practice of integrity rather than formal rules and regulations.
FATF Status & Compliance With FATF Recommendations
Denmark is not on the FATF List of Countries determined to have strategic AML deficiencies. The latest follow-up to the Mutual Evaluation Report in Denmark was undertaken in November 2019. Based on this Assessment, it has been considered compliant for 6 of the Danish FATF 40 Recommendations and Largely Compliant for 28.
The Danish AML Act covers persons and legal entities that commercially provide gambling with a license in Denmark. The Act protects all gambling products as a rule. However, the Minister for Taxation can exempt the offer of particular gambling products from the legislative requirements partly or entirely if the gambling product is assessed to constitute a low risk of being exploited in conjunction with money laundering. That possibility is utilized so that the Act covers gambling operators that offer:
- online casino
- based casino
The critical regulatory instrument setting out banks’ obligations in this area is the Danish AML Act. The Danish AML Act is not a Danish invention but primarily implements EU anti-money laundering regulations. The EU’s central regulation in the area is the so-called Anti-Money Laundering Directives, predominantly based on the FATF recommendations. Also, there are the sanctions lists adopted by the EU based on, for instance, the UN Security Council resolutions.
AML initiatives over the past ten years
- 2009:New Consolidated Danish AML Act
- 2012:The, FATF issues 40 recommendations.
- 2013:Guidelines on the Danish AML Act. New Consolidated Act on money laundering and financing of terrorism
- 2015:Second Wire Transfer Regulation. Fourth Anti-Money Laundering Directive. National Risk Assessment on money laundering.
- 2016:Act introducing a register of beneficial owners. Commission Delegated Regulations on the identification of high-risk third countries with strategic deficiencies
- 2017:Agreement on enhanced measures to prevent international tax evasion. New Danish AML Act. Seven Executive Orders were issued under the Danish AML Act. Political agreement on enhanced measures to prevent money laundering etc., in the financial sector.
- 2018:National strategy for anti-money laundering and terrorist financing (2018-2021). Fifth Anti-Money Laundering Directive Act amending the Danish AML Act (Enhanced measures to prevent money laundering). Political agreement on additional initiatives to strengthen anti-money laundering and counter-terrorist financing efforts. New guidelines on the Danish AML Act. Act amending the Danish AML Act (tightening anti-money laundering rules )
- 2019:Political agreement on enhanced measures to prevent financial crime. National Risk Assessment on money laundering (State Prosecutor for Serious Economic and International Crime). Act amending the Danish AML Act (implementing the Fifth Anti-Money Laundering Directive). Act amending the Danish Companies Act et al. (amending the rules on beneficial owners due to the Fifth Anti-Money Laundering Directive).