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)
Date: 2002-01-18
Institutions: European Central Bank
Subjects: Denmark, fight against crime, financial stability, money, money laundering, national law, payment system

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  act

amending the Act on money laundering (hereinafter referred to as 'the draft act'). Subsequently, the

draft act was revised. On 27 December 2001 the ECB received a request to take the revisions to the

draft 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 institutions

and markets and, possibly, the efficiency of payment systems. In accordance with the first sentence

of  Article 17.5  of  the  Rules  of  Procedure  of  the  European  Central  Bank,  this  opinion  has  been

adopted 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  UN

Security Council Resolution No. 1373 of 28 September 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 concentrates

on 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 related

to terrorism as well as the freezing of suspected terrorist assets. It also extends the scope of the Act

on  money  laundering  to  include  ‘alternative  systems  of  payment  and  wireless  payment  transfers

1 

OJ L 189, 3.7.1998, p. 42.

                                                     
under the duty to report obligation’ and the obligation to ensure at all times the ability to identify

senders  in  payment-transaction  activities.  Finally,  the  draft  act  introduces  the  possibility  of

imposing 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  against

counterfeiting2, 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  to

implement the Directive amending Council Directive 91/308/EEC of 10 June 1991 on  prevention

of the use of the financial system for the purpose of money laundering4 are not provisions on which

the  Danish  consulting  authority  has  to  formally  consult  the  ECB.  This  opinion  focuses  on  the

implementation 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  terrorist

activities, as expressed in the Governing Council's public statement of 1 October 2001. In order to

ensure that public trust in the integrity of the financial system is fully preserved, it is of the utmost

importance  that  financial  systems  do  not  work  to  the  benefit  of  persons  and  organisations

associated  with  terrorist  activities.  Against  this  general  background,  the  ECB  welcomes  the

objective 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  system

operator ensures that only supervised institutions may participate, no further requirements should

be  imposed  on  the  payment  system  itself.  The  ECB  is  of  the  opinion  that  to  be  effective  the

combating of money laundering and financing of terrorism needs to be organised in an efficient and

coordinated way. Duplication of effort and unnecessary burdens on enterprises should be avoided

and  the  institutions  subject  to  obligations  should  have  a  clear  understanding  of  the  requirements

imposed  on  them.  Against  this  general  background,  the  ECB  would  like  to  put  forward  some

specific 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  an

electronic  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 ‘comprehensive’. This  means,  as explained in  the

general  remarks,  that  the  sender  must  not  denote  persons  who  are  clearly  providing  incorrect

information regarding their identity. It is also specified that a lack of the required information shall

be  considered  as  suspicious  by  the  payment-transaction  agent.  According  to  the  draft  act,  the

2 
3 
4 

OJ L 181, 4.7.2001, p. 6.
OJ L 181, 4.7.2001, p. 11.
OJ L 166, 28.6.1991, p. 77.

2

                                                     
information 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  when

establishing business relationships with their participants, including in connection with the opening

of  an  account  or  a  safe  custody.  The  proof  of  identity  must  include  name,  address,  national

registration number (CPR number) or business registration 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  should

request the information detailed above from their participants at the time of setting up of the initial

business relationships, which is in fact the case at present. However, regarding  the  processing  of

each individual payment message, the ECB would like to state the following. First, with a view to

fostering the adoption of measures to  combat  terrorist  activities, the  ECB  supports  and promotes

any  initiatives  for  harmonisation  in  the  area  of  payment  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 contained

in a payment message. The information, which is provided by the participants, is checked before

the  start  of  processing,  but  such  checking  is  only  intended  to  verify  that  the  relevant  mandatory

fields in the payment message are properly filled in. The truthfulness of the content is not checked.

Payment systems operators need to rely in this respect on the information provided to them by the

originator  of the payment.  On  this  point, the  ECB  is  of  the  view  that  a  requirement  on  payment

systems operators to ensure and verify that the information regarding the sender is both sufficient

and meaningful would not improve on current procedures imposed by the banking supervisory and

anti-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 draft

act are also imposed on banks and non-bank financial institutions and other entities, which are the

originators of payment orders in the payment systems, duplication of the same requirements at the

level  of  the  operators  of  the  systems  themselves  should  be  avoided.  In  addition,  the  possible

technical constraints on the implementation of such requirements in the Danish payment systems

and the impact that such requirements could have on the smooth functioning and efficiency of the

payment 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 presence

of mandatory sender and recipient information can be checked automatically by a payment system

before a payment message is accepted for processing. During the transmission and processing of a

payment  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 all

or 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. 

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8. 

According  to  Section  1(2)  of  the  draft  act,  companies  that  engage  in  commercial  activities

concerning  the  transfer  of  money  and  other  values  must  ensure  that  they  are  registered  with  the

Public  Prosecutor  for  Serious  Economic  Crime  in  order  to  carry  out  this  type  of  commercial

activity. The registration requirement does not apply to companies that are under the supervision of

the Danish Financial Supervisory Authority. The ECB has no objection as such to the purpose of

the draft act as stated in the general remarks - that all companies engaged in the transfer of money

and  other  values  must  be  registered.  It  is  explained  that  this  provision  intended  to  implement

Recommendation  VI  of  the  FATF  on  ‘alternative  remittance’,  the  main  intention  of  which  is  to

capture  payment-transactions  agencies  outside  the  financial  sector  in  order  to  be  able  to  subject

them to the duty to report. The ECB understands that this registration requirement does not apply to

Danmarks  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  the

Danish  Financial  Supervisory  Authority  according  to  the  Danish  national  law  implementing

Directive  98/26/EC  of  the  European  Parliament  and  of  the  Council  on  settlement  finality  in

payment and securities settlement systems5.  

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  that

when there is reason to suspect that a transaction had some connection to terrorism, the company

must carry out an investigation of the transaction. If the investigation does not clear up the matter

the Public Prosecutor for Serious Economic Crime must be informed. Transactions may then only

be  carried  out  in  agreement  with  this  person.  These  requirements  also  apply  broadly  to  ‘all

companies engaged in commercial activities concerning transfer of money and other assets’.  The

ECB 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 Public

Prosecutor  for  Serious  Economic  Crime  before  being  able  to  process  a  payment  message  is

contrary  to  the  fundamental  logic  and  functioning  of  a  payment  system.  Any  reporting  to  this

person  should  be  carried  out  by  the  entity  originating  the  payment.  The  ECB  considers  that  this

provision  of  the  draft  act  goes  beyond  the  scope  of  Recommendation  III  of  the  FATF  which  it

believes  was  not  intended  to  impose  similar  requirements  at  the  level  of  payment  systems.  The

comments  above  also  apply  to  the  new  Section  10b,  according  to  which  the  Danish  Financial

Supervisory Authority may adopt more specific regulations regarding the obligation to give notice

to  the  Public  Prosecutor  for  Serious  Economic  Crime  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  any

other 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.

4

                                                     
professional  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  have

withdrawn from circulation. The ECB notes that the obligations contained in the directly applicable

Article 6(1) of Council Regulation (EC) No 1338/2001, which is extended to Denmark under the

terms  of  Council  Regulation  (EC)  No  1339/2001,  are  covered  by  the  new  Section  10d.  On  that

basis the amended Section 13 (together with the provisions of the Danish criminal code) imposes

sanctions  for failure  to  comply  with  Article  6(1)  of  Council  Regulation  (EC)  No  1338/2001  and

therefore  further  fulfils  the  obligation  imposed  on  the  Member  States  by  Article  6(2)  of  that

Regulation.  In  view  of  this  method  chosen  to  apply  Article  6  of  Council  Regulation  (EC)  No

1338/2001, the ECB underlines the importance of establishments subject to sanctions according to

the new Section 10d and the amended Section 13 being the same as the establishments referred to

in  Article  6(1)  of  the  Regulation.  Furthermore,  the  ECB  would  welcome  efforts  by  the  national

central  banks  and  the  banking  industry  to  ensure  the  effectiveness  of  the  detection  and  the

withdrawal from circulation of possible euro counterfeits, 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

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