Six Danish pension providers have been ordered to revise their risk assessments regarding money laundering, after the country’s financial watchdog followed through on a tightening of the regulations at the end of last year.
AP Pension was given several official orders to correct procedures, while others, such as Danica Pension and PenSam, got away more lightly following a series of inspections conducted by the Danish FSA.
The FSA said it had conducted an investigation into the risk assessments of life insurance and pension companies regarding money-laundering in the fourth quarter of 2020, involving risk assessments of 10 firms.
The probe was to see if the firms were complying with paragraph 7 subsection 1 of the Money Laundering Act, which says businesses must do a risk assessment identifying and assessing the risk they could be used for money laundering and terrorist financing, it said.
The authority said in a statement: “The Danish FSA’s investigation has resulted in six life insurance and pension companies being ordered to revise their risk assessment in the area of money laundering.”
The watchdog said that although the sector was generally considered at a low risk of being used for money laundering, not all pension products carried the same attached risks.
It singled out the “§ 53 a-product,” – a product unsuitable for Danish taxpayers, since contributions are not deductible and returns are taxed – as being medium risk for potential misuse.
In its assessment of AP Pension, the FSA said that although the company was considered low risk in general compared to the average financial company in Denmark, its money-laundering risk assessment had to be changed to reflect the medium risk nature of its § 53 a-product.
Among the official orders the FSA issued to AP Pension were instructions for the firm to ramp up the identity information it held on customers; to carry out a risk classification of all its customers, and to ensure it continuously monitored established business relationships.
In response, AP Pension said in a statement: “The executive board of AP Pension takes note of the report and has initiated work to improve the areas that the Danish Financial Supervisory Authority has pointed out.”
The FSA also issued single orders to Danica Pension, PenSam, Sampension, Norli Pension and PKA, with all being classified as at low risk of being used for money laundering.
At the beginning of November last year, the FSA issued a revised version of the guidelines on the Money Laundering Act (hvidvaskloven), which included changes to the rules on collection and control of identity information on real owners.
The revision was necessary, it said, because of new requirements in the Money Laundering Act as a result of the implementation of the European Commission’s fifth anti-money laundering Directive and the Danish political agreements on money laundering of 19 September 2018 and 27 March 2019.
Last month, lobby group Insurance and Pensions Denmark criticised the new controls, saying that for pension providers the requirements are far more onerous than necessary – disapproval the FSA countered by saying that every year it was told of suspicions of money laundering in these companies.