The Danish FSA and its relaxed approach regarding Københavns Andelskasse and Clearhaus A/S

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KBH Kobenhavn Andelskasse

The Danish FSA and its relaxed approach regarding Københavns Andelskasse and Clearhaus A/S

As of January 21, 2021, UNZER (formerly Heidelpay) announced its acquisition of two Danish payment companies: Clearhaus A/S, an acquiring company (payment institution supervised by the Danish FSA and QuickPay in Aarhus in Denmark – subject to the approval of the relevant supervisory authorities. EFRI represents 77 victims who have deposited their life savings via the Danish bank Københavns Andelskasse (KBH) to different investment scams from 2016 to 2018. With Clearhaus having been a substantial owner of the cooperative bank for several years, we are pretty interested in the above transaction.

Evidently, by now, UNZER is busy with other things as BaFin is supposed to start an investigation at the company, as Handelsblatt reported in July 2021.

In Denmark, the Danish FSA had already started an inspection on payment service and money laundering at Clearhaus in winter 2018. Only on May 5, 2021, did the Danish FSA issue the final report about the results of the inspection done.

 

According to the report, the following requests from the Danish FSA are placed with Clearhaus:

  • to revise its AML policy so that the policy identifies and defines how the company will manage and mitigate the risks of money laundering based on its risk assessment.
  • To prepare written control procedures to ensure that any non-compliance with business procedures is detected and addressed.
  • To explicitly document which persons are responsible for following up on errors and deficiencies identified in the context of internal controls.
  • To prepare clear procedures for how risks are monitored and addressed and Clearhaus is ordered to ensure that the risk assessment explicitly addresses the risk of having payment institutions as customers.

According to the inspection report, the Danish FSA assesses that Clearhaus’ inherent risk of money laundering and terrorist financing in connection with the company’s business model is normal to high. This assessment is based on the fact that the company’s business model mainly accepts card payments on behalf of online stores. The report states that the risk of money laundering in connection with this type of business is typically considered limited and related, in particular to cases where a counterfeit store is set up. The report continues by talking about the fact that the company has several other payment institutions as customers, with whom the company has a significant turnover. Danish FSA attributes high risk to these customers.

The report does not mention that as of September 7, 2018, an inspection report (available to us) about a small Danish bank – Kobenhavn Andelskasse – was issued by the Danish FSA, painting a disastrous picture about the compliance and leadership of the bank, which has been on the watchlist of the Danish FSA since 2012.

The inspection report about Kobenhavns Andelskasse issued as of September 6, 2018, raised the following issues:

  • The report confirms that Københavns Andelskasse was heavily involved in money laundering and terrorist financing in 2016, 2017, and 2018, increasing its level on international payments – above all for foreign customers offering payment services – drastically.
  • The inspection report finds that KBH Andelskasse neither had the organizational competence nor the appropriate resources required to handle those potential ML/TF issues associated with the foreign customers.
  • The report even states that the Danish FSA observed during the inspection in summer 2018 a deficient level of knowledge of the regulatory framework within Københavns Andelskasse.
  • The Danish FSA assessed in the inspection report that the overall competencies relating to money laundering prevention and terrorist financing among Andelskasse’s employees did not correspond to the complexity of Andelskasse’s customer portfolio.
  • The Danish FSA found that the methods for risk classification did not work at all within Københavns Andelskasse; no appropriate customer due diligence in respect of UBO check was done.
  • KBH had limited knowledge of how its customers earn their money as the relevant forms had only been completed for very few customers.
  • The monitoring system triggered 5,598 ML/TFA alarms (!) during 2017. Only 156 notices got processed by the person responsible for money laundering.
  • KBH estimated that there were between 300 and 400 suspicious transactions at the inspection, of which SØIK was notified only once.
  • The report states that the employees of the Andelskasse did not know how to notify SØIK.
  • Finansiel Stabilitet reported in spring 2019 that suspicious customers in Andelskasse sent about EUR 55 Mio (DKK 4 billion) through the small bank from October 2017 to September 2018.

Although the inspection audit about Clearhaus A/S as of May 5, 2021, does not mention the role of Clearhaus within Kobenhavns Andelskasse, the Role of Clearhaus A/S within Københavns Andelskasse is described very prominently in the inspection report as of September 7, 2018.

  • Furthermore, the report elaborates on the destructive and harmful influence of the bank owners on the governance structure of Andelskasse.
  • In particular, the report outlines that boards of directors and executive committees of Andelskasse have allowed persons related to the Clearhaus Group[1] (having been a substantial owner of the cooperative bank for several years) access to internal systems of Andelskasse. So Clearhaus Group arranged for dispositions[2], where it has not been clear that the transactions in question were made in the interest of KBH Andelskasse. (Please be aware that Clearhaus A/S (part of the Clearhaus group) was licensed as a payment institution in 2012 already. The company’s business model is acquiring, cf. the Danish Payments Act’s appendix 1, no.5. DFSA is also in charge of supervising Clearhaus A/S.)
  • According to the FSA report,  employees of Clearhaus had direct access to KBH Andelskasse systems, just as employees of Andelskasse have been informally subject to instructional powers from Clearhaus.

After issuing the disastrous report, the DFSA notified Finansiel Stabilitet (FS) that Københavns Andelskasse was expected to be distressed, cf. 1, No. 1, I Financial Business Act. Finansie Stability (“FS”) took over control of KBH Andelskasse on September 13, 2018. FSA started to inspect Clearhaus, resulting in the above-described report as of May 7, 2021.

Both companies have been servicing the same questionable shell companies

Doing a quick research online, it gets evident that Københavns Andelskasse processed the wire transfers, and Clearhaus A/S made the credit card payments for the shady customers (payment companies).

Bureau Solutions Limited (registered with the Companies number 07993747 nowadays: TECHTOPAY LIMITED) used the bank account of Københavns Andelskasse (DK2678720006601038) to launder stolen money for a fraudulent project of Robert Courtneidge and Bobby Gill. As of January 6 2021, a legal case filed with the London High Court revealed that Clearhaus was doing business with Bureau Solutions Limited ((nowadays TechToPay Limited (former owner OZON ORK)) until the end of 2019 (case number CL-2020-000831).

 

 

No open issues here according to the Danish FSA!

How on earth is it possible that a licensed company which is to blame for a severe money laundering case and evident cooperation with criminal organizations can go on with its business and do even more harm to innocent European consumers?

The European victims who transferred money to investment scams via Kobenhavn Andelskasse still have not received a refund from the Danish bank. No one has been held liable for the fraud within the regulated European bank supervised by a European supervisory authority.

We raised all these issues in a letter to the Danish FSA dated September 8, 2021. You can download it here.

 

[1] It is stated in the Danish FSA’s report of May 17 2016, that:

“Morten Soltveit, who is general counsel at Clearhaus AIS, which also owns a qualified ownership interest in Andelskasse, has thus more or less permanently participated as an external consultant at the board meetings from November 2015 to February 2016, including dealing with matters containing confidential customer information. He has also been provided with written material with such customer information.

Despite inquiries about this, the Danish FSA has not received a consultancy contract or other documentation regarding Morten Soltveit’s work for Andelskasse. According to the minutes of the Board of Directors, the Board of Directors has not taken a specific position on what Morten Soltveit’s work for Andelskasse consists of, apart from a very general assignment. Morten Soltveit has reportedly not received a salary or fee from Andelskasse.

[2] On May 3 2018, the Board of Directors made a grant that is deemed indefensible. The board decides to release security in Morten Soltveit’s private property, which Network Property owns. In addition, another conflict case is decided for Mark Szigethy. The decisions are seen to be in favour of Clearhaus alone and not in the interest of Andelskasse. (Clearhaus Holding A/S is as of 17.04.2017 registered as the owner of 25-33% of Network Property A/S. In addition to Clearhaus Holding A/S, PO-MA Invest ApS is also registered as the company’s owner with an ownership share of 67-90%. Claus Methmann Christensen is registered as Chairman of the company’s board, which was founded in 2015. The company’s purpose is described in the CVR as the purpose of the company is trading in real estate, mortgages, and other claims).