The lobby group Insurance and Pensions Denmark (IPD) has criticised new anti-money laundering controls imposed by the Danish Financial Supervisory Authority (FSA), saying that for pension providers the requirements are far more onerous than necessary.
The financial watchdog, meanwhile, responded to the criticism, telling IPE the companies were only being obliged to do what was necessary.
Torben Weiss Garne, IPD deputy director, said: “The risk of money laundering is extremely limited – and yet pension companies are facing an increasing number of requirements that seem completely out of proportion to the risk.”
IPD said Denmark’s fraud squad – the State Prosecutor for Serious Economic and International Crime (SØIK) – had stated that the risk of money laundering in the pensions sector was extremely limited, but the industry was still being confronted with more control and stricter reporting requirements, which the association said seemed “meaningless and costly.”
The lobby group said the pensions industry used “significant resources” to fight money laundering every year, adding that the FSA had to ensure that their control measures were proportionate.
“It is difficult to imagine which employer or employee is going to have the idea of money laundering by paying 15-16% of the salary each year into a pension scheme that is only paid out when you retire,” Weiss Garne argued.
Pension savings were taxed at the time of payment, declared for tax due to the right to deduct, and paid in via a bank, he said, which was also required to report suspicious transactions.
IPD said its objections related to an FSA executive order which came into force on 1 January 2021, on the reporting of information for use in the watchdog’s risk assessment of companies and persons covered by the money laundering act.
It meant pension firms had to report information to the FSA which IPD argued bore no relation to the risk of money laundering – such as number of transactions and number of customer relationships.
Stig Nielsen, head of anti money laundering and counter financing of terrorism at the Danish FSA, told IPE that the watchdog agreed that the risk of money laundering through pension funds and life insurance companies was low.
“But it is not zero,” he said. “And every year we do receive notifications related to suspicion of money laundering in these companies,” Nielsen said.
“Proportionality should not be measured in terms of what the costs of control of money laundering are, but in terms of what the risk is, and the companies are only obliged to do what is necessary,” he said.