Denmark’s fin regulator publishes findings from Saxo Bank inspection
Denmark’s FSA has found that the Bank’s initiatives to reduce the inherent risks related to compliance and financial crime were not sufficiently prioritized.
The Danish Financial Supervisory Authority (FSA) has posted the report from its latest inspection of online trading company Saxo Bank. The inspection was conducted in March 2019 and focused on important risk areas.
The bank’s business model is based on building customer relationships and conducting due diligence of customers from many countries. The bank is therefore particularly exposed to non-financial risks, the regulator noted. In particular, the Danish FSA considers that the business model of Saxo involves high inherent compliance risks and risks of financial crime.
During the inspection, the Danish FSA was able to find that the Bank’s initiatives to reduce the inherent risks related to compliance and financial crime were not sufficiently prioritized. The Danish FSA therefore considers that this risk remains high. The bank was instructed to produce a plan for the necessary measures to reduce these risks.
An initiative that the bank had already initiated concerned reviewing customer information. The Danish FSA considered that the initiative had not been given high priority, and the bank was instructed to complete the work.
In addition, the Danish FSA was able to observe that the board’s policies and guidelines in a number of areas were imprecise, for instance, regarding compliance risks and risks of financial crime.
Further, the bank was instructed to ensure the risk manager’s independence from the business decisions. Furthermore, the bank was instructed that the risk manager’s annual report to the board of directors should be expanded.
The Danish Financial Supervisory Authority finds that Saxo’s compliance officers’ function focused on the securities trading area, as well as the anti-money laundering area and fighting market abuse. The bank was instructed to expand the compliance function’s focus to include the legislation in all relevant areas for the bank.
The Danish FSA considers that the high remaining level of compliance risk and risk of financial crime can affect the bank’s reputation, business model and earnings.
