Denmark

CENTRAL AUTHORITY FOR REPORTING

• Public Prosecutor for Serious Economic Crime.
• The Danish Bar and Law Society: Members of the Danish Bar and Law Society may submit notification of suspicions to the Secretariat of the Society, which will forward the notification to the Public Prosecutor for Serious Economic Crime after specific assessment.

ANTI-MONEY LAUNDERING REGULATOR(S)

Finanstilsynet (The Danish FSA) attends to financial regulation in Denmark. Every firm not overseen by the Danish FSA has to register with and send reports to the Public Prosecutor for Serious Economic Crime.

HAS THE THIRD EU MONEY LAUNDERING DIRECTIVE BEEN IMPLEMENTED? IF NOT, WHEN IS IT EXPECTED TO BE IMPLEMENTED?

The Third Directive was implemented in Denmark by Danish Act 117 of 27 February 2006 on Measures to Prevent Money Laundering and Terrorist Financing (“MLA”), which entered into force on March 1, 2006. The MLA was later amended and consolidated by Danish Act No. 442 of 11 May 2007.

The MLA, inter alia, addresses areas such as beneficial ownership and enhanced and simplified CDD and introduces elements of a risk-based approach.

LIST THE LAWS REGARDING ANTI-MONEY LAUNDERING, INDICATING WHICH LAWS ARE APPLICABLE TO LAWYERS

Act on Measures to Prevent Money Laundering and Financing of Terrorism, Act no. 442, 11 May 2007 (consolidated the 2006 MLA and its 2007 amendments)

ARE VISITING LAWYERS SUBJECT TO LOCAL LAWS REGARDING ANTI-MONEY LAUNDERING, AND, IF SO, TO WHAT EXTENT?

Lawyers from other EU Member States may provide legal services in Denmark following the rules on freedom of movement of lawyers. Such visiting lawyers must adhere to the same anti-money laundering regulations as are applicable to Danish lawyers.

LIST ANY MONEY LAUNDERING GUIDANCE FOR LAWYERS (FOR EXAMPLE, LAW SOCIETY OR BAR ASSOCIATION GUIDELINES) CURRENTLY IN PLACE

The Danish Bar and Law Society has issued guidelines to all members of the Danish Bar and Law Society on their obligations under the MLA and the Third Directive. Other professional bodies have issued guidelines as well, and lawyers may also find these helpful when coming to terms with their obligations.

IS THE LAW SOCIETY/BAR ASSOCIATION INVOLVED IN SUPERVISING OR ENFORCING COMPLIANCE WITH ANTI-MONEY LAUNDERING REGULATIONS?

The Danish Bar and Law Society is the competent authority to ensure lawyers’ general compliance with existing regulations. This applies also to compliance with the MLA. Failure to comply with the MLA may therefore be tried as a disciplinary offence before the Disciplinary Board.

DESCRIBE CLIENT DUE DILIGENCE REQUIREMENTS, INCLUDING WHEN IT MUST BE UNDERTAKEN BY LAWYERS

A lawyer is under an obligation to demand that clients establish their identity when a business relationship is entered into.

If a customer is a physical person, then the identification documentation must include name, address and civil registration number, or other similar documentation if the relevant person has no civil registration number.

If the customer is a company the identification documentation must include name, address, CVR number (company registration number), or other similar documentation if the company has no CVR number.

Reasonable arrangements must be made to understand a company’s control structure and the beneficial owners must be identified.

The client relationship must be monitored on an on-going basis. Documentation and other information on the client must be updated on an on-going basis.

If there is any doubt whether information previously received on an existing client’s identity is correct or adequate, new identification must be established. Lawyers can decide to carry out the identification procedure based on a risk assessment of the individual client or transaction. However, a lawyer cannot completely omit to obtain information on the identity of a client.

Furthermore, a lawyer is obliged to develop guidelines and instructions on customer identification, reporting, filing registrations, internal control, risk assessment, risk management, management control and communication, in addition to educational programmes for employees to prevent money laundering and terrorist financing.

DOES YOUR COUNTRY FOLLOW A RISK-BASED APPROACH TO CLIENT DUE DILIGENCE BY LAWYERS?

Yes, Denmark follows a risk-based approach to money laundering and terrorist financing. Thus, there are no hard and fast rules regarding the telltale signs of criminal activity at financial firms and Danish regulators are obliged to correct any misapprehensions that firms might have. Nonetheless, in 2006 the Danish prosecutor’s office published a rough guide of things indicating money laundering or terrorist finance.

ARE THERE ENHANCED DUE DILIGENCE MEASURES FOR CERTAIN TYPES OF CLIENTS, FOR EXAMPLE, POLITICALLY EXPOSED PERSONS?

Enhanced due diligence is required whenever money laundering or terrorist financing seems more likely than at other times. Danish law points to situations where (i) the customer has not yet been physically present for identification purposes, (ii) there are cross-border correspondent banking relationships with institutions outside the EEA; and (iii) the transaction or business relationship involves a politically exposed person.

ARE THERE SIMPLIFIED DUE DILIGENCE MEASURES FOR CERTAIN TYPES OF CLIENTS, FOR EXAMPLE, LISTED COMPANIES?

Article 20 of the MLA provides 5 types of transactions for which the ordinary identity verification requirements are not required. The list deals primarily with life assurance and pension contracts of specific types.

Additionally, the MLA empowers the Danish FSA to make regulations exempting other types of transactions and clients on the basis of decisions handed down by the European Commission.

ARE LAWYERS PERMITTED TO RELY ON THIRD PARTY DUE DILIGENCE? IF YES, PLEASE DESCRIBE.

Article 17 of the MLA provides that third parties may be relied upon if they meet certain requirements. Among those suitable are financial institutions licensed to do business within the European Union, within a country with which the European Community has entered into an agreement for the financial area, or within a country not falling within the first two categories that imposes money laundering and terrorist financing laws similar to the Third EU Directive.

WHEN IS A LAWYER UNDER AN OBLIGATION TO REPORT SUSPICIOUS TRANSACTIONS?

Lawyers are subject to section 1, subsection 1, no. (13) and (14) of the MLA in the following instances:

1. (13) When they provide assistance in the planning or execution of transactions for their clients, involving:

   1. The purchase and sale of real property or undertakings;
   2. Managing their clients’ money, securities, or other assets;
   3. Opening or managing bank accounts, savings accounts, or securities accounts;
   4. Raising the necessary capital for the establishment, operation, or management of the undertakings;
   5. Establishing, operating, or managing undertakings; or
   6. Providing other business advice.
   
   
2. (14) When they, on behalf of their client and at said client’s expense, carry out a financial transaction or a transaction concerning real property.

Provided there is suspicion of a client’s transaction or the enquiry has or has had connection to money laundering or financing of terrorism, lawyers must investigate the transaction or the enquiry. Provided the suspicion concerns potential violations which would be subject to a prison sentence of more that 1 year and this suspicion is confirmed, the Public Prosecutor for Serious Economic Crime must be informed immediately.

DOES ATTORNEY/CLIENT PRIVILEGE AND/OR DUTIES OF CONFIDENTIALITY PROVIDE A DEFENCE OR PARTIAL/TOTAL EXCEPTION TO THE REQUIREMENT TO REPORT SUSPICIOUS TRANSACTIONS?

A lawyer is exempted from reporting information that the lawyer receives from or obtains about one of his clients in connection with determining the legal position for the client or defending or representing said client in, or concerning, judicial proceedings, including advice on instituting or avoiding proceedings.