Danske Bank fined 1.82 million euros for failures to monitor AML transactions

On September 13, 2022, the Central Bank of Ireland fined Danske Bank €1.82 million for transaction monitoring failures in its anti-money laundering (AML) and anti-cash financing systems. of terrorism. Pursuant to the Central Bank’s administrative sanctions procedure, Danske Bank was reprimanded by the Central Bank for multiple breaches of the Criminal Justice (Money Laundering and Financing of Terrorism) Act 2010 (CJA) between 2010 and 2019.

Meanwhile, Denmark’s Danske Bank failed to ensure that its automated transaction monitoring system monitored the transactions of certain groups of customers at its Dublin-based branch. This led to the exclusion of specific customer categories from the transaction monitoring process, including some customers categorized by the bank as medium and high risk.

Transaction monitoring failures

According to the enforcement action, the root cause of these failures was found in outdated data filters applied in Danske’s automated transaction monitoring system, which had not been updated since it was applied to the Irish branch. in 2006. By failing to consider whether data filters were appropriate within the system, Danske Bank failed to take into account the specific requirements of the CJA when it came into force in Ireland in 2010.

Following an internal audit in May 2015, Danske Bank became aware of the shortcomings of its transaction monitoring system and the nature of the risks it posed. However, the bank failed to inform the Irish branch of these issues and failed to take appropriate action for nearly four years. Between August 31, 2015 and March 31, 2019, an estimated 348,321 transactions processed through the Irish branch were not screened for money laundering and terrorist financing risk.

Danske Bank’s failures ultimately led to three CJA violations, all of which the bank admitted. In addition to its failures to monitor transactions, the bank violated the CJA regarding:

  • Enhanced Customer Due Diligence: Danske’s Irish branch did not consider transaction monitoring data, which is essential to identify and assess illicit finance risks specific to these customers and determine where significant additional action might be needed.
  • Policies, procedures and controls to combat money laundering and the financing of terrorism (AML/CFT): The policies, procedures and controls implemented by Danske Bank did not identify the exclusion of certain customer groups from automated transaction monitoring.

Key points to remember

Automated transaction monitoring systems are essential for effective data management. However, ensuring regulatory compliance means introducing, enforcing and regularly reviewing policies to ensure that systems are working properly. This may include testing above and below the line to model the potential impact of any rule changes

In addition, compliance personnel must ensure that the group’s systems, policies, procedures and controls are compatible with the legal requirements defined by the jurisdiction in which they operate.

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On September 13, 2022, the Central Bank of Ireland fined by Danske Bank €1.82 million for transaction monitoring failures in its anti-money laundering (AML) and counter-terrorist financing systems. In accordance with the Central Bank Administrative Sanctions ProcedureDanske Bank has been reprimanded by the Central Bank for multiple breaches of the Criminal Justice (Money Laundering and Financing of Terrorism) Act 2010 (CJA) between 2010 and 2019.

Meanwhile, Denmark’s Danske Bank failed to ensure that its automated transaction monitoring system monitored the transactions of certain groups of customers at its Dublin-based branch. This led to the exclusion of specific customer categories from the transaction monitoring process, including some customers categorized by the bank as medium and high risk.

Transaction monitoring failures

According to eapplication measurethe root cause of these failures was found in outdated data filters applied in Danske’s automated transaction monitoring system, which had not been updated since it was applied to the Irish branch in 2006. By failing to consider whether data filters were appropriate within the system, Danske Bank failed to take into account the specific requirements of the CJA when it came into force in Ireland in 2010.

Following an internal audit in May 2015, Danske Bank became aware of the shortcomings of its transaction monitoring system and the nature of the risks it presented. However, the bank failed to inform the Irish branch of these issues and failed to take appropriate action for nearly four years. Between August 31, 2015 and March 31, 2019, an estimated 348,321 transactions processed through the Irish branch were not screened for money laundering and terrorist financing risk.

Danske Bank’s failures ultimately led to three CJA violations, all of which the bank admitted. In addition to its failures to monitor transactions, the bank violated the CJA regarding:

  • Enhanced Customer Due Diligence: Danske’s Irish branch disregarded transaction monitoring data, which is key to identifying and assessing illicit finance risks specific to these customers and determine where additional meaningful metrics might be needed.
  • Policies, procedures and controls to combat money laundering and the financing of terrorism (AML/CFT): The policies, procedures and controls implemented by Danske Bank did not identify the exclusion of certain customer groups from automated transaction monitoring.

Key points to remember

Automated transaction monitoring systems are essential for effective data management. However, ensuring regulatory compliance means introduction, application and regular review of policies to make sure the systems are working properly. This may include testing above and below the line to model the potential impact of any rule changes

In addition, compliance personnel must ensure that the group’s systems, policies, procedures and controls are compatible with the legal requirements defined by the jurisdiction in which they operate.

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Originally published September 22, 2022, updated September 22, 2022

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