Order on Conditions for Establishing Subsidiaries, Branches, or Representative Offices of Entities and Persons from High-Risk Third Countries in Denmark and for Establishing Branches and Representative Offices in High-Risk Third Countries

Order on Conditions for Establishing Subsidiaries, Branches, or Representative Offices of Entities and Persons from High-Risk Third Countries in Denmark and for Establishing Branches and Representative Offices in High-Risk Third Countries 1)

Pursuant to Section 31a, subsection 2, Section 31b, subsection 3, and Section 78, subsection 6, of the Act on Preventive Measures against Money Laundering and Financing of Terrorism (the Money Laundering Act), cf. Statutory Order No. 807 of 21 June 2024, it is hereby prescribed:

Section 1. Entities and persons exercising the type of activity referred to in Section 1, subsection 1, items 1-12, 18, and 22 of the Money Laundering Act, and having their domicile in a country listed on the European Commission's list of high-risk third countries, may only establish subsidiaries, branches, or representative offices in Denmark if the high-risk third country has committed at the high political level to address the identified deficiencies in the public statement of the Financial Action Task Force (FATF) regarding that country. The high-risk third country must also have decided to request technical assistance to implement the Financial Action Task Force (FATF) action plan and address the deficiencies identified by the Financial Action Task Force (FATF) and the European Commission.

Subsection 2. Entities and persons covered by subsection 1 must, prior to establishing subsidiaries, branches, or representative offices in Denmark, submit documentation to the Danish Financial Supervisory Authority (Finanstilsynet) proving that the conditions in subsection 1 are met. This is done, for example, by forwarding documentation showing that the high-risk third country is included on the European Commission's list of countries meeting the conditions in subsection 1. Establishment may only take place after the Danish Financial Supervisory Authority has notified the entity or person that sufficient documentation has been submitted proving that the conditions in subsection 1 are met.

Section 2. Entities and persons covered by Section 1, subsection 1, items 1-12, 18, and 22 of the Money Laundering Act, with domicile in Denmark, who wish to establish a branch or a representative office in a high-risk third country, must determine in the entity's or person's risk assessment which risk-mitigating measures the entity or person will implement to counter the risk of money laundering and financing of terrorism in the branch or representative office located in the relevant high-risk third country. The risk assessment must take into account relevant evaluations, assessments, and reports prepared by international organizations and standard-setters with competence in the prevention of money laundering and combating the financing of terrorism, such as the Financial Action Task Force (FATF).

Subsection 2. Entities and persons mentioned in subsection 1 must carry out enhanced supervision of the relevant branch or representative office, for example by conducting frequent inspection visits to the branch or representative office, or by conducting extensive spot checks to show whether the branch or representative office complies with relevant policies, procedures, and controls.

Subsection 3. The Danish Financial Supervisory Authority may, in relation to individual entities and persons mentioned in subsection 1, impose requirements for external audit of the entities' or persons' branches and representative offices located in a country listed on the European Commission's list of high-risk third countries.

Section 3. Credit and financing institutions covered by Section 1, subsection 1, items 1-10, 18, and 22 of the Money Laundering Act, which have correspondent relationships with respondent institutions located in a country listed on the European Commission's list of high-risk third countries, must investigate the risk of money laundering and financing of terrorism in relation to each individual correspondent relationship and, based on a concrete assessment, determine whether it is necessary to introduce additional risk-mitigating measures in relation to the correspondent relationship with the respondent institution or to terminate the correspondent relationship.

Section 4. Whoever, with intent or through gross negligence, violates Section 2, subsections 1 and 2, and Section 3, shall be liable to a fine.

1. The Order contains provisions that implement parts of Directive 2018/843/EU of the European Parliament and of the Council of 30 May 2018 amending Directive (EU) 2015/849 on preventive measures against the use of the financial system for the purpose of money laundering or terrorist financing, and amending Directives 2009/138/EC and 2013/36/EU, Official Journal of the European Union 2018, No. L 156, page 43.

Statutory Journal A 2024 Published on 28 September 2024 17 September 2024. No. 1064. Ministry of Industry, Business and Financial Affairs, Danish Financial Supervisory Authority, file no. 24-004861 CQ002929

Subsection 2. Companies and other legal persons may be subject to criminal liability under the rules in Chapter 5 of the Danish Penal Code.

Section 5. This Order shall enter into force on 30 December 2024.

Subsection 2. Statutory Order No. 2365 of 9 December 2021 on conditions for the establishment of subsidiaries, branches, or representative offices of entities and persons from high-risk third countries in Denmark and for the establishment of branches and representative offices in high-risk third countries is repealed.

Danish Financial Supervisory Authority, 17 September 2024 Louise Mogensen / Heidi Ravnholt 17 September 2024. No. 1064.