DFSA Finds Improvements Needed in ML/TF Monitoring and Payments Rules
The Danish Financial Supervisory Authority (DFSA), announced that blockchain proved its potential in a test in its regulatory sandbox, known as FT Lab. However, it can be difficult to determine how to handle services based on blockchain within the existing regulation. DFSA expects that the current issues, when using blockchain as an infrastructure for payment services, will be addressed at the European Union level, including in the upcoming review of the Payment Services Directive. The test also showed that blockchain-based payment services have the potential to compete with existing payment solutions that use the existing payment infrastructure. In a separate assessment, DFSA investigated transaction monitoring at the seven largest banks in the country. The study showed the need for changes and improvements in a number of areas and this finding applies to both the monitoring systems and the procedures in the field.
The study on transaction monitoring was conducted with the assistance of international consulting firms—Deloitte, McKinsey & Company, and Duff & Phelps, to carry out inspections of transaction supervision in seven largest banks in Denmark—Jyske Bank, Nykredit, Spar Nord Bank, Handelsbanken, Sydbank, Danske Bank, and Nordea Danmark. The study investigated bank compliance with rules in the area of money laundering and terrorist financing (or ML/TF)DFSA Finds Improvements Needed in ML/TF Monitoring and Payments Rules and monitored the quality of transactions. DFSA concluded that monitoring scenarios should be flexible and constantly evolving to enable banks to consider developments in their risks, including new forms of crime and new methods of money laundering and terrorist financing. DFSA also emphasized that trade finance transactions and capital market transactions must be monitored with increased focus on money laundering and terrorist financing. There is a need for banks to spend significant resources on updating and improving their transaction monitoring and alarm processing.
Related Links
- Press Release on Blockchain (in Danish)
- Assessment on Blockchain Use in Payment Services (PDF)
- Press Release on Transaction Assessment (in Danish)
Keywords: Europe, Denmark, Banking, Blockchain, Regtech, Bank Transaction Monitoring, ML TF Risk, AML CFT, DFSA
Related Articles
BIS and Central Banks Experiment with GenAI to Assess Climate Risks
A recent report from the Bank for International Settlements (BIS) Innovation Hub details Project Gaia, a collaboration between the BIS Innovation Hub Eurosystem Center and certain central banks in Europe
Nearly 25% G-SIBs Commit to Adopting TNFD Nature-Related Disclosures
Nature-related risks are increasing in severity and frequency, affecting businesses, capital providers, financial systems, and economies.
Singapore to Mandate Climate Disclosures from FY2025
Singapore recently took a significant step toward turning climate ambition into action, with the introduction of mandatory climate-related disclosures for listed and large non-listed companies
SEC Finalizes Climate-Related Disclosures Rule
The U.S. Securities and Exchange Commission (SEC) has finalized the long-awaited rule that mandates climate-related disclosures for domestic and foreign publicly listed companies in the U.S.
EBA Proposes Standards Related to Standardized Credit Risk Approach
The European Banking Authority (EBA) has been taking significant steps toward implementing the Basel III framework and strengthening the regulatory framework for credit institutions in the EU
US Regulators Release Stress Test Scenarios for Banks
The U.S. regulators recently released baseline and severely adverse scenarios, along with other details, for stress testing the banks in 2024. The relevant U.S. banking regulators are the Federal Reserve Bank (FED), the Federal Deposit Insurance Corporation (FDIC), and the Office of the Comptroller of the Currency (OCC).
Asian Governments Aim for Interoperability in AI Governance Frameworks
The regulatory landscape for artificial intelligence (AI), including the generative kind, is evolving rapidly, with governments and regulators aiming to address the challenges and opportunities presented by this transformative technology.
EBA Proposes Operational Risk Standards Under Final Basel III Package
The European Union (EU) has been working on the final elements of Basel III standards, with endorsement of the Banking Package and the publication of the European Banking Authority (EBA) roadmap on Basel III implementation in December 2023.
EFRAG Proposes XBRL Taxonomy and Standard for Listed SMEs Under ESRS
The European Financial Reporting Advisory Group (EFRAG), which plays a crucial role in shaping corporate reporting standards in European Union (EU), is seeking comments, until May 21, 2024, on the Exposure Draft ESRS for listed SMEs.
ECB to Expand Climate Change Work in 2024-2025
Banking regulators worldwide are increasingly focusing on addressing, monitoring, and supervising the institutions' exposure to climate and environmental risks.
