Denmark

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Overall Phase 2 Rating is Largely Compliant

Table of Determinations and Ratings of the Combined Review

Jurisdictions should ensure that ownership and identity information for all relevant entities and arrangements is available to their competent authorities. (ToR A.1)
Determination Factors Recommendations
The element is in place, but certain aspects of the legal implementation of the element need improvement.   The Beneficial Ownership Act contains several ambiguities the interpretation for which may not be in line with the international standard. First, the record-keeping requirements of the Act relate to documentation of the attempts by an entity to identify its beneficial owners and not to the documentation of the identity of the beneficial owners. Second, the Act permits an entity to fail to identify its beneficial owners, but does not clearly elaborate on when this is acceptable. Finally, the Act lacks guidance on what constitutes reasonable measures in identifying beneficial owners. Although these concerns are mitigated by AML rules where applicable, the scope of AML coverage in Denmark cannot be quantified as most entities are not required by law to engage an AML-obliged service provider.   Denmark is recommended to ensure that beneficial ownership information in accordance with the international standard is available. 
At the time of the review, although new legal provisions requiring the maintenance and submission of beneficial ownership information had entered into force, Denmark had not yet envisioned a plan of oversight. Further, questions remain as to the accuracy of information collected by entities that are not subject to AML regulations and how such information will be updated.  Denmark is recommended to ensure that information collected pursuant to the Beneficial Ownership Act is accurate and current. 
Phase 2 Rating Factors Recommendations
Partially Compliant.  Legal provisions requiring the registration of owners of bearer shares holding less than 5% of the share capital or voting rights were recently enacted and their implementation could not yet be fully assessed.  Denmark is recommended to monitor the implementation of new legal provisions requiring the registration of minor possessions of bearer shares. 
Over the review period, no supervision of entities’ record keeping obligations took place. In particular, authorities admitted that the record-keeping requirements of partnerships were not subject to oversight by any regulatory authority. Further, failure to enter legal ownership information upon registration was not punished over the review period.  Denmark is recommended to more rigorously supervise legal requirements pertaining to ownership information and to exercise its enforcement powers where necessary. 
Jurisdictions should ensure that reliable accounting records are kept for all relevant entities and arrangements. (ToR A.2)
Determination Factors Recommendations
The element is in place.      
Phase 2 Rating Factors Recommendations
Compliant.     
Banking information should be available for all account-holders. (ToR A.3)
Determination Factors Recommendations
The element is in place, but certain aspects of the legal implementation of the element need improvement.   Over the review period, rules allowing banks to rely on the CDD and KYC of third parties were not sufficiently rigorous. Information collected by third parties was not required to be made immediately available to the relying institution. Since June 2017, Denmark has a new AML law that strengthens introduced business requirements, but such provisions are too new for their application to have been assessed.  Denmark is recommended to monitor new legal provisions relating to third party reliance (introduced business). 
Phase 2 Rating Factors Recommendations
Partially Compliant.  Denmark has a fairly large banking sector in terms of assets. During the period under review, the FSA had only four staff in the unit responsible for AML supervision of banks and conducted only ten on-site inspections over a three year period. Further, serious AML violations were identified, but in only two cases (of repeat offences) were disciplinary actions taken. Among the AML violations identified were those relating to customer identification, record-keeping and correspondent banking.  Denmark is recommended to implement a more rigorous system of oversight of its banking sector. 
Competent authorities should have the power to obtain and provide information that is the subject of a request under an exchange of information arrangement from any person within their territorial jurisdiction who is in possession or control of such information (irrespective of any legal obligation on such person to maintain the secrecy of the information). (ToR B.1)
Determination Factors Recommendations
The element is in place.      
Phase 2 Rating Factors Recommendations
Compliant.     
The rights and safeguards (e.g. notification, appeal rights) that apply to persons in the requested jurisdiction should be compatible with effective exchange of information. (ToR B.2)
Determination Factors Recommendations
The element is in place.      
Phase 2 Rating Factors Recommendations
Compliant.     
Exchange of information mechanisms should provide for effective exchange of information. (ToR C.1)
Determination Factors Recommendations
The element is in place.      
Phase 2 Rating Factors Recommendations
Compliant.     
The jurisdictions' network of information exchange mechanisms should cover all relevant partners. (ToR C.2)
Determination Factors Recommendations
The element is in place.      
Phase 2 Rating Factors Recommendations
Compliant.     
The jurisdictions' mechanisms for exchange of information should have adequate provisions to ensure the confidentiality of information received. (ToR C.3)
Determination Factors Recommendations
The element is in place.      
Phase 2 Rating Factors Recommendations
Compliant.     
The exchange of information mechanisms should respect the rights and safeguards of taxpayers and third parties. (ToR C.4)
Determination Factors Recommendations
The element is in place.      
Phase 2 Rating Factors Recommendations
Compliant.     
The jurisdiction should provide information under its network of agreements in a timely manner. (ToR C.5)
Determination Factors Recommendations
The assessment team is not in a position to evaluate whether this element is in place, as it involves issues of practice that are dealt with in the Phase 2 review.      
Phase 2 Rating Factors Recommendations
     

Earlier self-assessment based annual reports entitled Tax Co-operation 2010: Towards a Level Playing Field are also available.