Combatting money laundering: Experts meet at CBS to have the difficult conversation
Lately, the Danes have been able to follow a rather extraordinary gallery of characters in the TV2 documentary “Den sorte svane (the black swan)”. The mole, Amira Smajic. The biker, Fasar. The lawyers, Nicolai Dyhr and Lise Roulund. And the businessman, Martin Malm.
From a Copenhagen office kept under constant surveillance this documentary provides viewers with insight into how hard-boiled criminals, esteemed lawyers and businesspeople apparently work together to commit extensive fraud, particularly in laundering money. Invoice fraud, tax evasion and shady transactions flow from the underworld to the legitimate world and back again.
Politicians have responded by wanting to tighten the rules, but according to Kalle Johannes Rose, Associate Professor at the Department of Accounting at CBS, who specialises in financial crime and money laundering, additional initiatives are necessary.
Imagine Denmark at war, with the army, air force and navy completely unable to communicate with each other.
Kalle Johannes Rose, Associate Professor
”I understand the reactions. And in reality, the documentary only unveils a microscopic part of a massive problem, so action is most definitely needed. But legislation is not the primary issue. The overall problem is the lack of coordination between those who are to enforce it,” says Kalle Johannes Rose, who is a former employee at the Danish Financial Supervisory Authority.
SOLDIERS WITHOUT GENERALS
Contrary to what some people might think, numerous stakeholders, including public authorities and private companies, are obliged to combat money laundering.
The public part constitutes the Ministry of Industry, Business and Financial Affairs, the Ministry of Justice and the Ministry of Taxation as well as a number of different authorities and agencies. The private sector includes thousands of representatives from the banking and accounting industries, Finance Denmark, Danske Spil and the Danish Bar and Law Society. They are under the obligation to report to the public authorities if they encounter any clients engaging in bank transactions or business practices that raise suspicion of financial crime.
”You can say that we have thousands of soldiers to defend the economy of this country and prevent black money from entering the circular flow, but there is no general to coordinate the soldiers. It is up to each soldier to construe what is the right strategy and how the job is best approached. And no one knows whether the accountant, lawyer or the tax industry have the same approach and risk assessment,” Kalle Johannes Rose points out and adds:
”Imagine Denmark at war with the army, air force and navy completely unable to communicate with each other. Currently, the efforts against money laundering are often based on individuals than entire organisations, and that is just not as efficient.”
FORUM FOR MONEY LAUNDERING AT CBS
Kalle Johannes Rose is one of the organisers of a conference on fighting money laundering, which takes place between 20-21 August at CBS. Rose hopes to engage with decision-makers, experts and other stakeholders from the industries responsible for preventing money laundering. The participants will help assess the best ways to establish a collaboration aimed at contributing to the goals of the national money laundering strategy.
Banks exemplify an industry that once took their responsibility too lightly but have now embraced their role with real commitment.
Kalle Johannes Rose, Associate Professor
”The constant flow of new money laundering scandals have long demonstrated a need for a more systematic approach to solving this issue. With the support of authorities and other Danish universities, CBS and Finance Denmark therefore invite stakeholders to participate in a two-day expert forum, which is to identify vulnerabilities contributing to new types of money laundering and find solutions enabling us to establish a new framework for more effective anti-money laundering efforts in the future,” says Kalle Johannes Rose and adds:
”Some of the conversations might be difficult because of our different cultures, however, we cannot only be driven by rules and duty, there must be a societal commitment and a collective wish to maximise efficiency in combatting money laundering. The banks exemplify an industry that once took their responsibility too lightly but have now embraced their role with real commitment.
To further motivate the conference, the CBS researcher refers to Denmark's 2022-2025 national strategy for preventing and combatting money laundering and terrorist financing, which says: ”The authorities must collaborate with relevant actors, including, for instance, academia who has knowledge of money laundering and terrorist financing.”
CRIMINALS LAUNDER MORE MONEY THAN LEGO EARNS
There is a clear need to take action if we are serious about fighting those who see money laundering as something else than running cash through the wash. The Danish Money Laundering Secretariat thus estimates that criminals launder around DKK 68 billion annually.
And according to Kalle Johannes Rose, this is probably an underestimation. The real figure may very well be twice as much, however, the conservative estimate of DKK 68 billion indicates that the combined turnover of the criminal underworld and legitimate sectors surpasses that of the LEGO Group and its 17,000 employees, which reported a net turnover of DKK 65.9 billion last year.
”Clearly, we cannot stop crime, but by curbing the illegal flow of money, we can significantly reduce the incentive to commit crime and ensure a flow of money that is much more beneficial to society,” Kalle Johannes Rose states.