INTERNAL RULES ABOUT CONTROL MEASURES AGAINST LAUNDERING OF MONEY
Rose Advokater /v Caspar Rose
Charlottenlund Stationsplads 2
CVR nr. 25 86 33 13
December 4th, 2020
1. In general.
The Act on preventive measures against money laundering has been applicable to banks, etc. since 1 July 1993. With effect from 1 August 2002, lawyers are now also covered of the legislation against money laundering and terrorist financing, cf. Exexcutive Order No. 1022 of 13.August 2013 with subsequent amendments (the Money Laundering Act) and executive orders.
Money laundering can generally be described as actions and concealments for the purpose of changing identity of money or other assets acquired in violation of the Penal Code, so that the money / assets appear to come from a legal source.
At www.advokatsamfundet.dk, the Bar Council has published guidelines aimed at lawyers concerning the Money Laundering Act, and the Danish Financial Supervisory Authority has issued money laundering guidelines, no. 9184 of 24 April2013, which can be read at www.finanstilsynet.dk, where Chapter 19 is specifically aimed at lawyers who practicing law.
Attorney Caspar Rose is the responsible partner in matters related to the Money Laundering Act and
the regulations on financial sanctions.
2. Written internal rules and reporting obligations
The companies covered by the law must prepare written, internal rules on reassuring control and communication procedures as well as training and information programs for employees. All employees must thus be made aware of the duties set out in the legislation against money laundering. Please refer to the appendix.
If there is a suspicion that the client’s inquiry has or has been connected to money laundering or terrorist financing, the matter needs to be investigated further. If the suspicion cannot be disproved the lawyer is obliged to report to the Danish Bar Association or the Public Prosecutor for Special Economic Crime (SØIK).
The lawyer must also be aware of the rules on financial sanctions against countries persons, groups, legal entities or bodies.
3. Cases covered by the Money Laundering Act
Lawyers are covered by the Money Laundering Act in the following cases, cf. the Money Laundering Act, section 1, subsection. 1, nos. 13 and 14:
”13) Attorneys when participating with assistance in planning or executing transactions for their clients associated with
(a) the purchase and sale of real estate or businesses;
(b) management of clients’ money, securities or other assets;
(c) opening or managing bank, savings or securities accounts;
(d) the provision of capital necessary for the creation, operation or management of enterprises; or
(e) the creation, operation or management of enterprises.
14) Attorneys when conducting a financial transaction on behalf of and on behalf of their client or a real estate transaction.”
Conversely, the following matters are generally not covered by the Money Laundering Act:
- unless the case is covered by the Money Laundering Act, section 1, subsection. 1, No. 13, letters a-c, or No. 14.
Litigation, etc .:
- Usual property administration is not covered by the Money Laundering Act.
4. Customer identification and identification – KYC.
An important part of the effort against money laundering, etc. is that the lawyer knows the identity of the person who contact the lawyer to seek advice or other form of assistance, e.g. related with payment transactions. The law therefore sets out a number of identification rules, which the lawyer and employees acting on behalf of the lawyer have a duty to comply with. This duty implies that the client identifies himself by name, address, cpr./passport No. or CVR No. when making a business connection. The identification procedure is carried out upon presentation of a passport or driving license (photo ID).CVR means for the uniquie official Company No.
The company’s ownership and control structure must be determined and possible real/beneficial owners (s) must be legitimized. A diagram of the company’s owner and control structure must therefore be prepared. In case the information on the ownership and control structure cannot be obtained through public registers, the information may be obtained with the assistance of the client or agencies that provide business information.
The real or beneficial owners of the company, i.e. persons who, through several ownership chains, ultimately own more than 25% of the capital and / or voting rights of the company that is the client must be identified and legitimized in accordance with the procedure applicable to natural persons, cf. above. If identification does not at least include name, address and civil registration number. or CVR no., the client relationship must not be initiated and financial transactions are not executed.
The identity information is recorded and filed, the identification documents are copied / scanned and the information stored on the case or in the client master card.
5. Power of attorney:
It must be determined whether the client is acting on his own behalf or on behalf of someone else. If an assignment is made possible by the director/board member of a company making inquiries on behalf of the company there is a power of attorney, cf. section 15 of the Money Laundering Act. In case the client acts on behalf of another person or company, the real/beneficial client must be identified and legitimized.
The identity of the proxy must be clarified on the basis of a risk assessment. Clarification of identity implies that – unless a risk assessment may lead to otherwise – there is no obligation to carry out an actual identification procedure in relation to the proxy. If, for example it is an employee of the company, the company’s website, a business card, etc., based on a risk assessment is sufficient.
It must be ensured that the agent is empowered to make inquiries on behalf of the real/beneficial client. This can be done, for example, by presenting a power of attorney, an assessment of whether the person in question is acting in accordance with power of attorney, and in cases where the power to bind rules are presented, that these have been complied with.
6. Stricter identification requirements:
If a client or the background of a client’s inquiry in itself entails an increased risk of money laundering and terrorist financing, additional requirements must be set on the basis of a risk assessment identification than mentioned in section 12 of the Money Laundering Act.
It follows from section 19 of the Money Laundering Act that additional measures must be taken if the client does not have been present to identify him/herself.
If the client is a politically exposed person (PEP) residing in another country, cf. the Money Laundering Act, section 19, subsection. 4, cf. § 3, para. 1, no. 6, stricter measures must be implemented.
7. Risk-based identification:
Risk-based identification of clients that the lawyer knows personally can be carried out. Furthermore, risk-based identification of the real/beneficial owners of a company can be carried out below provided that the lawyer in charge of the case has a good knowledge of the real/beneficial owners, and under provided that the firm has been a client of the lawyer for more than 3 years and the person in question has been real/beneficial owners of the company for at least the same period. If the requirement of good knowledge of a real/beneficial owner only applies to some of the real owners, the identification cannot be carried out risk-based.
8. Reuse of identification
The starting point in the Money Laundering Act is that duty subjects, e.g. lawyers, must obtain on their own credentials and require the presentation of credentials, even if other duty subjects have or must carry out the same identification procedure.
9. Monitoring the customer relationship and updating the information about the client
The client relationship must be continuously monitored and it must be checked that the transactions made by the lawyer assists with the planning or execution of, appears logical and natural in relation to the purpose of the business relationship.
If, in connection with the case processing, circumstances are found that may be related to money laundering or terrorism, this must be noted /recorded, cf. section 6 of the Money Laundering Act, cf. section 23, subsection 2.
It must be continuously checked that the identity information obtained is up to date. For corporations, it is particularly important to clarify any changes in the company’s ownership and control structure.
10. Storage of identity information and documents, etc .
Identity information regarding clients is stored for at least 5 years after the client relationship has ended.
In the case of payment transactions, records and documents relating to these must be kept for at least 5 years after the transaction has been completed.
In ongoing cases for the client, identity information, copies of identification documents, notes, etc. are stored.
In a case created separately for this purpose, the notes must contain references to the relevant ones journal numbers and cases, which have given rise to their preparation.
If the client relationship is established in connection with assistance in one specific case can identity information, copy of identification documents, notes, etc. instead stored on the client master card.
11. Duty of confidentiality.
The lawyer and employees are obliged to keep secret that information has been provided to the Danish Bar Association / The Public Prosecutor for Economic Crime or that an investigation has been launched into money laundering or the like.
Information given in good faith to the Danish Bar Association / The Public Prosecutor for Economic Crime is not considered by law to be a breach of the attorney’s general duty of confidentiality in client relationships or as breach of the duty of confidentiality in relation to the legislation in general.
Violation of the rules of the Money Laundering Act is punishable by a fine. By particularly coarse or extensive intentional offenses can increase the sentence to imprisonment for up to 6 months. Aiding and abetting money laundering can be punishable by imprisonment for up to 6 years under section 290 of the Criminal/Penal Code, while aiding and abetting the financing of terrorism can be punished by imprisonment for life under section 29 of the Penal Code nr. 114. In addition, the lawyer may be sanctioned for violating the rules of legal ethics that govern one series of identical issues.
Rose Advokater v/ Caspar Rose
INSTRUCTIONS FOR ALL EMPLOYEES
1. The client’s inquiry to a lawyer:
When creating a case for a new client, the following information must be secured:
- the client’s name, address and CPR.nr. or CVR.no.
- the client must identify him/herself e.g. by copy of driver’s license, passport or other secure identification.
In the case of companies, e.g. by printing from the CVR register.
2. Receipt of money:
When receiving money as well as existing clients, the lawyer must make sure identity information of the person who has paid / transferred the amount in the form of name, address and cpr.nr./CVR.nr.
3. Payment / transfer of money:
In connection with payment or transfer of money from a client account, information must also be sent to the payee, so that the payee has identity information on the payee.
Has paid into the client account.
4. Closing/archiving of the case:
The client’s identity information must be kept for a minimum of 5 years after the termination of the client relationship. The identification information must therefore be kept either on the case or in another secure manner for a minimum of 5 years. The same applies to documentation and registration regarding payment transactions.
5. Shredding of archive cases:
Shredding must take place no earlier than 5 years after the client relationship has ended, unless the identity information stored in another safe manner.
Rose Advokater v/Caspar Rose