EN
OPINION OF THE EUROPEAN CENTRAL BANK
of 18 January 2002
at the request of the Danish Ministry of Economic and Business Affairs
on a draft act amending the Act on money laundering 
(CON/2002/4)
1. On 5 December 2001 the European Central Bank (ECB) received a request via Danmarks
Nationalbank from the Ministry of Economic and Business Affairs for an opinion on a draft actamending the Act on money laundering (hereinafter referred to as 'the draft act'). Subsequently, thedraft act was revised. On 27 December 2001 the ECB received a request to take the revisions to thedraft act into account in the present opinion.
2. The ECBs competence to deliver an opinion is based on Article 105(4) of the Treaty establishing
the European Community (hereinafter referred to as the Treaty) and the first, second, fifth and
sixth  indents of Article 2(1) of Council Decision 98/ 415/EC of 29 June 1998 on the consultation of
the European Central Bank by national authorities regarding draft legislative provisions1, as the
draft act, amongst other things, contains provisions  on the withdrawal from circulation of possible
euro counterfeits and on companies that engage in  commercial activities concerning the transfer of
money and other assets. The draft act may have an influence on the stability of financial institutionsand markets and, possibly, the efficiency of payment systems. In accordance with the first sentenceof Article 17.5 of the Rules of Procedure of the European Central Bank, this opinion has beenadopted by the Governing Council of the ECB.
3. The draft act implements changes intended to fulfil the requirements laid down by the UN
Convention of 9 December 1999 regarding the suppression of financing of terrorism and UNSecurity Council Resolution No. 1373 of 28 Septem ber 2001 regarding the combating of terrorism.
In addition, the draft act responds to the recommendations of the Financial Action Task Force(FATF) which are part of the international efforts to combat terrorism. The draft act concentrateson Recommendations III, IV, VI and VII. In this respect and as explained in the general remarks,the draft act includes provisions regarding the reporting of transactions suspected of being relatedto terrorism as well as the freezing of suspected terrorist assets. It also extends the scope of the Acton money laundering to include alternative systems of payment and wireless payment transfers
                                                     
1 OJ L 189, 3.7.1998, p. 42.
2under the duty to report obligation and the obligati on to ensure at all times the ability to identify
senders in payment-transaction activities. Finally, the draft act introduces the possibility ofimposing sanctions for non-compliance with the requirements of Article 6(1) of Council Regulation(EC) No 1338/2001 laying down measures necessary for the protection of the euro againstcounterfeiting
2, in accordance with Council Regulation (EC) No 1339/20013. Having regard to the
provisions of Council Decision 98/415/EC, the provisions in the draft act which are intended toimplement the Directive amending Council Directive 91/308/EEC of 10 June 1991 on preventionof the use of the financial system for the purpose of money laundering
4 are not provisions on which
the Danish consulting authority has to formally consult the ECB. This opinion focuses on theimplementation of the FATF recommendations mentioned above. 
4. First, the ECB would like to recall the commitment of the Eurosystem to contribute to the adoption,
implementation and execution of measures against the use of the financial system for terroristactivities, as expressed in the Governing Council's public statement of 1 October 2001. In order toensure that public trust in the integrity of the financial system is fully preserved, it is of the utmostimportance that financial systems do not work to the benefit of persons and organisationsassociated with terrorist activities. Against this general background, the ECB welcomes theobjective of the draft act of combating the financing of terrorism more efficiently.
5. The ECB notes that the obligations already in place to combat money laundering are in Europe
addressed to credit institutions and financial institutions. Hence, whenever the payment systemoperator ensures that only supervised institutions may participate, no further requirements shouldbe imposed on the payment system itself. The ECB is of the opinion that to be effective thecombating of money laundering and financing of terrorism needs to be organised in an efficient andcoordinated way. Duplication of effort and unnecessary burdens on enterprises should be avoidedand the institutions subject to obligations should have a clear understanding of the requirementsimposed on them. Against this general background, the ECB would like to put forward somespecific comments on the provisions of the draft act.
6. The general remarks explain that, according to Section 1(6), companies that administer payment
transfers will be obliged to ensure that it is possible at all times to identify the sender during anelectronic payment transaction. Details regarding the identity of the sender must follow the
payment even when this involves several transactions before it reaches its final destination.Furthermore, the required information must be c omprehensive. This means, as explained in the
general remarks, that the sender must not denote persons who are clearly providing incorrectinformation regarding their identity. It is also specified that a lack of the required information shallbe considered as suspicious by the payment-tr ansaction agent. According to the draft act, the
                                                     
2 OJ L 181, 4.7.2001, p. 6.
3 OJ L 181, 4.7.2001, p. 11.
4 OJ L 166, 28.6.1991, p. 77.
3information regarding the sender would be that referred to in Section 4 Subsection 1 of the Act on
money laundering. Subsection 1 provides that companies must obtain proof of identity whenestablishing business relationships with their participants, including in connection with the openingof an account or a safe custody. The proof of identity must include name, address, nationalregistration number (CPR number) or business re gistration number (CVR number) or other similar
documentation if the person in question does not have a CPR or CVR number. The ECB is of the
view that if these provisions were to apply to payment system operators, such operators shouldrequest the information detailed above from their participants at the time of setting up of the initialbusiness relationships, which is in fact the case at present. However, regarding the processing ofeach individual payment message, the ECB would like to state the following. First, with a view tofostering the adoption of measures to combat terrorist activities, the ECB supports and promotesany initiatives for harmonisation in the area of pa yment messaging, in particular with a view to
making the inclusion of certain fields in a payment message mandatory . However, the task of
payment systems operators is to ensure the secure and safe transmission of information containedin a payment message. The information, which is provided by the participants, is checked beforethe start of processing, but such checking is only intended to verify that the relevant mandatoryfields in the payment message are properly filled in. The truthfulness of the content is not checked.Payment systems operators need to rely in this re spect on the information provided to them by the
originator of the payment. On this point, the E CB is of the view that a requirement on payment
systems operators to ensure and verify that the information regarding the sender is both sufficientand meaningful would not improve on current procedures imposed by the banking supervisory andanti-money laundering authorities on banks and non-bank financial institutions and other entities,in accordance with the FATF recommendations. Indeed, as the requirements laid down in the draftact are also imposed on banks and non-bank financial institutions and other entities, which are theoriginators of payment orders in the payment systems, duplication of the same requirements at thelevel of the operators of the systems themselves should be avoided. In addition, the possibletechnical constraints on the implementation of such requirements in the Danish payment systemsand the impact that such requirements could have on the smooth functioning and efficiency of thepayment systems should be carefully considered. 
7. Secondly, it should be borne in mind that at present sender and recipient information can be
transmitted directly from the sending bank to the receiving bank. As mentioned above, the presenceof mandatory sender and recipient information can be checked automatically by a payment systembefore a payment message is accepted for processing. During the transmission and processing of apayment the sender and recipient information does not necessarily have to be forwarded to the
settlement part of the payment system. It depends on the topology of a payment system whether allor only part of the data included in a payment message are forwarded to this part. Therefore, the
provision requiring that the sender should be identified at all times throughout the life cycle of a
payment should be understood as not necessarily involving the settlement of the payment itself. 
48. According to Section 1(2) of the draft act, co mpanies that engage in commercial activities
concerning the transfer of money and other values must ensure that they are registered with thePublic Prosecutor for Serious Economic Crime in order to carry out this type of commercialactivity. The registration requirement does not apply to companies that are under the supervision ofthe Danish Financial Supervisory Authority. The ECB has no objection as such to the purpose ofthe draft act as stated in the general remarks - th at all companies engaged in the transfer of money
and other values must be registered. It is explained that this provision intended to implementRecommendation VI of the FATF on alternative remittance, the main intention of which is tocapture payment-transactions agencies outside the fi nancial sector in order to be able to subject
them to the duty to report. The ECB understands that this registration requirement does not apply toDanmarks Nationalbank, when acting as the operator of any payment or clearing system.Moreover, the ECB understands that all payment systems must already be registered with theDanish Financial Supervisory Authority according to the Danish national law implementingDirective 98/26/EC of the European Parliament  and of the Council on settlement finality in
payment and securities settlement systems
5.  
9. Section 1(13) of the draft act is intended to implement the FATFs Recommendation III on freezing
and confiscating terrorist assets. It introduces a new Section 10a in the Act, which provides thatwhen there is reason to suspect that a transaction had some connection to terrorism, the companymust carry out an investigation of the transaction. If the investigation does not clear up the matterthe Public Prosecutor for Serious Economic Crime must be informed. Transactions may then onlybe carried out in agreement with this person. These requirements also apply broadly to allcompanies engaged in commercial activities concerning transfer of money and other assets. TheECB is of the opinion that this provision should not apply to payment systems as such, which are
not structured to carry out investigations, as outlined above. Requiring the agreement of the PublicProsecutor for Serious Economic Crime before being able to process a payment message iscontrary to the fundamental logic and functioning of a payment system. Any reporting to thisperson should be carried out by the entity originating the payment. The ECB considers that thisprovision of the draft act goes beyond the scope of Recommendation III of the FATF which itbelieves was not intended to impose similar requirements at the level of payment systems. Thecomments above also apply to the new Section 10b, according to which the Danish FinancialSupervisory Authority may adopt more specific regulations regarding the obligation to give noticeto the Public Prosecutor for Serious Economic Cr ime regarding financial transactions involving
uncooperative countries. 
10. Finally, the ECB welcomes the provision in the amended Section 13 of the Act which, in
connection with the new Section 10d, intends to impose sanctions on credit institutions and anyother establishments involved in the sorting and distribution to the public of notes and coins as a
                                                     
5 OJ L 166, 11.6.1998, p. 45.
5professional activity, where they fail to immediately hand over to the police any notes or coins
which they know or have sufficient reason to believe to be counterfeit, and which they havewithdrawn from circulation. The ECB notes that the obligations contained in the directly applicable
Article 6(1) of Council Regulation (EC) No 13 38/2001, which is extended to Denmark under the
terms of Council Regulation (EC) No 1339/2001, are covered by the new Section 10d. On thatbasis the amended Section 13 (together with the provisions of the Danish criminal code) imposessanctions for failure to comply with Article 6(1) of Council Regulation (EC) No 1338/2001 andtherefore further fulfils the obligation imposed on the Member States by Article 6(2) of thatRegulation. In view of this method chosen to apply Article 6 of Council Regulation (EC) No1338/2001, the ECB underlines the importance of establishments subject to sanctions according tothe new Section 10d and the amended Section 13 being the same as the establishments referred toin Article 6(1) of the Regulation. Furthermore, the ECB would welcome efforts by the nationalcentral banks and the banking industry to ensure the effectiveness of the detection and thewithdrawal from circulation of possible euro count erfeits, as an accompaniment to the draft acts
implementation of Article 6 of Council Regulation (EC) No 1338/2001.
11. The ECB confirms that it has no objection to the competent national authorities making this
opinion publicly available at their discretion.
Done at Frankfurt am Main on 18 January 2002.
The President of the ECB
[signed]
Willem F. DUISENBERG