Danish FSA orders six pension companies to revise money-laundering risk assessment

The Danish Financial Supervisory Authority (FSA) has ordered six life insurance and pension companies to revise their risk assessment on money laundering.

It follows a review undertaken by the FSA on 10 life insurance and pension companies’ risk assessments in the area of money laundering to make sure they comply with section 7 (1).1 of the Money Laundering Act.

This provision requires individual companies to prepare a risk assessment, which identifies and assesses the risk that the company may be used for money laundering and terrorist financing.

The Danish FSA generally assesses that life insurance and pension companies in Denmark as a whole have a relatively low risk of being used for money laundering or terrorist financing. However, it said companies still need to make sure that the risks that do exist are covered.

The FSA highlighted the § 53 product, which is a particularly non-tax-favoured pension scheme, as being medium risk.

“The study showed that the quality and scope of the risk assessments vary. Several life insurance and pension companies have not prepared a sufficient risk assessment that reflects the risks to which the companies are exposed. Conversely, there are also companies that have a good risk assessment,” it stated.

As part of its review, the FSA focussed on whether the company has sufficiently identified the risk factors that must at least be included in a risk assessment pursuant to section 7 (1). 1 of the Money Laundering Act and whether the company has adequately identified and assessed the inherent risk of being used for money laundering and terrorist financing.

It also looked at whether the company has adequately hedged its risk separately for money laundering and terrorist financing, and whether the company has sufficiently substantiated the risk assessment with relevant information and taken as its starting point the supranational and national risk assessment, as well as other forms of documentation in the area.

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