AML

AML stands for Anti-Money Laundering and covers all the actions, processes and procedures that a company undertakes to combat money laundering and terrorist financing.

The topic of AML is large and complex, which can be seen in larger Danish banks, which often have large legal departments that focus exclusively on AML work. But it's far from only banks in Denmark that are subject to AML regulations. A wide range of other industries and companies are also subject to these regulations.

This article is not a guide to implementing AML in your organization, but an introduction to the topic in its overall entirety.

In Denmark, AML and money laundering are regulated by the Money Laundering Act.

Who is covered by AML?

In Denmark, the following persons and companies are covered by the Money Laundering Act: banks, mortgage banks, brokerage companies, insurance companies, savings companies, real estate agents, lawyers, accountants and many other types of companies.

What these companies have in common is that they often handle, administer, move or manage customers' money or assets in one way or another.

What is money laundering?

The Money Laundering Act defines money laundering as the unauthorized receiving or obtaining financial control over funds acquired through criminal offenses. This includes concealing, transporting or storing funds for the purpose of securing financial gain from illegal activities.

When it comes to terrorist financing, the Money Laundering Act defines this as the financing of acts covered by section 114 of the Penal Code.

The purpose of AML is to prevent money laundering from taking place and ensure that the company does not involuntarily act as an intermediary for terrorist financing or money laundering.

KYC

KYC (Know Your Customer/Know Your Client) is an important part of AML work. KYC is about gaining knowledge of the customer, their financial situation and performing a risk analysis of the customer.

Chapter 3 of the Anti-Money Laundering Act on "Know Your Customer Procedures" defines a number of requirements that companies must comply with and be aware of regarding their customers.

Read more: KYC process

Risk assessment and risk management

Companies subject to the Money Laundering Act must identify and assess the risk of the company being misused for money laundering or terrorist financing - this applies to every single customer.

In addition, the company must have written policies, procedures and controls in place to ensure compliance with KYC procedures.

You can read more about this in chapter 3, sections 7, 8 and 9 of the Money Laundering Act.

AML in practice

For some companies, AML work can be a heavy but necessary task to help combat money laundering and terrorist financing.

In practice, however, there are many tools, templates and systems that make AML easier than theory might suggest.

Bank advisors, real estate agents and others subject to anti-money laundering laws often use systems with predefined questions and topics to ensure that the company complies with applicable requirements and regulations.