The Danish Financial Supervisory Authority (FSA) today issued a statement on an inspection of virtual currency services provider Coinify ApS.
The inspection, conducted in May 2020, focused on AML rules compliance. The inspection covered the company’s policies, procedures and internal controls as well as customer due diligence procedures including monitoring of customers.
The company is registered in accordance with the Money Laundering Act, section 48, subsection 2. Coinify offers its customers the opportunity to buy and sell virtual currencies through the company’s trade platform. Furthermore, the company has a payment service, where corporate customers have the opportunity to accept virtual currency as a means of payment.
The Danish Financial Supervisory Authority assesses that the company’s inherent risk of being used for money laundering or terrorist financing is normal to high. In making the assessment, the regulator has placed special emphasis on the company having a simple business model without the possibility that the company’s customers may have deposits in the company. Conversely, the company’s customer portfolio consists exclusively of distance customers, and the company’s services are suitable for money laundering and terrorist financing.
Based on the inspection, two areas have given rise to supervisory reactions. The company is instructed to revise the company’s risk assessment so that it adequately identifies and assesses the risk of the company being used for money laundering and terrorist financing. Coinify is also instructed to ensure that its money laundering manager approves policies, controls and business procedures.
Commenting on the inspection, Coinify stated:
“Coinify is dedicated to providing a secure and compliant service to our customers working towards mainstream adoption of virtual currency usage.
For many years we have worked alongside national and international bodies such as the Danish Financial Supervisory Authority. The implementation of the European Union’s 5th directive on AML in January 2020 made it possible for our ongoing positive relationship to be recognised with an official registration with the Danish FSA. As part of being registered with the Danish FSA, Coinify is now eligible for scrutinisation of its processes and procedures by the regulator.
Formal inspections by financial authorities mark an important step in developing the maturity of the world of virtual currency, and Coinify is therefore proud to be one of the first virtual currency trading companies in Northern Europe to go through this process”.