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    DFSA Finds Improvements Needed in ML/TF Monitoring and Payments Rules

    February 04, 2022

    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.

     

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    Keywords: Europe, Denmark, Banking, Blockchain, Regtech, Bank Transaction Monitoring, ML TF Risk, AML CFT, DFSA

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