Danish watchdog faces surge in reports of suspicious money flows

Reports of suspicious transactions submitted by banks and betting firms to authorities in Denmark have increased tenfold in recent years, according to documents seen by Reuters, applying pressure on an already stretched anti-money laundering watchdog.

Banks across the Nordic region are facing increasing scrutiny by regulators after a string of money laundering scandals, including at Danske Bank, Denmark's biggest lender. Since 2013 the number of suspicious transaction reports submitted to Denmark's Financial Intelligence Unit (FIU), which investigates reports of suspected criminal behavior, has risen tenfold to 53,454 in 2019, according to an FIU paper reviewed by Reuters.

According to the paper, a quarter of all reports last year were passed along to police or tax authorities for further investigation into potential fraud or terrorism financing. "Of course, when the banks are strengthening their compliance efforts, this increases the pressure on the next link, the ones they are submitting the reports to," professor of financial regulation and money-laundering at Copenhagen University, Linda Nielsen, told Reuters.

The FIU said it was not immediately able to comment. Nordic financial firms are on a hiring spree to beef up their compliance and anti-money laundering departments. Danske Bank said last year it would spend an additional 2 billion Danish crowns ($300 million) to improve IT systems and hire an additional 600 compliance workers.

Banks have invested heavily in regulatory technology, known as "reg. tech", to automate the process of identifying new customers and teach computers to detect suspicious patterns in money flows. Separately on Friday, Denmark's national auditing agency said efforts to combat money laundering and terrorism financing by Danish authorities had not been effective or adequate.

Nielsen said the prospect of another money-laundering scandal could mean Danish banks and betting companies are being overly cautious. "They would rather be careful and report a lot rather than a little."

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