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

UNZER’s Acquisition and the Role of Clearhaus A/S and KBH in Online Fraud.

As of January 21, 2021, UNZER (formerly Heidelpay) announced its acquisition of two Danish payment companies: Clearhaus A/S, an acquiring company and payment institution regulated by the Danish FSA, and QuickPay, based in Aarhus, Denmark. This transaction is subject to approval by the relevant supervisory authorities.

It appears, however, that UNZER is currently occupied with other matters. As reported by Handelsblatt in July 2021, BaFin is expected to initiate an investigation into the company. Meanwhile, in Denmark, the Danish FSA began an inspection of Clearhaus regarding payment services and money laundering practices in late 2018. On May 5, 2021, the Danish FSA published its final inspection report, which outlined significant issues.

EFRI represents 77 victims who lost their life savings via the Danish bank Københavns Andelskasse (KBH) – a former Clearhaus subsidiary – to various investment scams between 2016 and 2018. Given that Clearhaus was a substantial owner of Kobenhavn Andelskasse – for several years, we are deeply interested in the above-mentioned transaction.

Findings of the Danish FSA Inspection on Clearhaus A/S (Clearhaus report)

The Danish FSA issued the following directives to Clearhaus based on its findings:

Revise the Ant-Money-Laundering policy to clearly define how the company will manage and mitigate money laundering risks based on its risk assessment.
Develop written control procedures to detect and address non-compliance with business procedures.
Clearly document the responsibilities of individuals tasked with following up on errors and deficiencies identified through internal controls.
Establish explicit procedures for monitoring and addressing risks, ensuring that its risk assessment includes the risks of having payment institutions as customers.

The Danish FSA assessed that the inherent risk of money laundering and terrorist financing in Clearhaus’ business model is normal to high, primarily because the company facilitates card payments for online stores. The report notes that risks are generally limited but increase significantly in cases involving counterfeit stores or when the company has payment institutions as customers—a category the Danish FSA (in line with EBA guidelines) identifies as high risk.

The report does not mention at all 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. Although there were substantial connections between Clearhaus A/S and KBH from 2017 up to 2018, the years under investigation, FSA evidently failed to report about this relationship.

Similar Findings of FSA on Københavns Andelskasse (KBH report)

Separately, the Danish FSA’s September 2018 KBH report painted a grim picture of the bank’s compliance and governance failures. The report, issued on September 6, 2018, highlighted the following issues:

KBH was heavily involved in money laundering and terrorist financing between 2016 and 2018, drastically increasing its crossborder payment transaction business for foreign payment institutions (like Moorwand Ltd,..)
The bank lacked the organizational competence and resources to handle the associated risks.
Employees demonstrated a deficient understanding of regulatory requirements during the 2018 inspection.
AML/TF competencies among KBH staff were grossly inadequate, given the complexity of the customer portfolio.
Risk classification methods were non-functional, and no adequate customer due diligence (CDD) was performed regarding Ultimate Beneficial Owners (UBOs).
KBH had limited knowledge of how its customers earned their money, as relevant forms were completed for only a tiny fraction of clients.
In 2017, the bank’s monitoring system triggered 5,598 AML/TF alarms, yet only 156 cases were reviewed by the money laundering officer.
Of the estimated 300–400 suspicious transactions identified during the inspection, only one was reported to SØIK (the Danish Financial Crime Unit).
Employees were unaware of how to report suspicious transactions to SØIK.
Finansiel Stabilitet reported in 2019 that KBH processed approximately €55 million (DKK 4 billion) in suspicious transactions between October 2017 and September 2018.

Clearhaus’ Role in Københavns Andelskasse management

While the May 2021 report on Clearhaus does not explicitly reference its involvement with KBH, the FSA’s September 2018 report highlights Clearhaus’ significant influence over Kobenhavn Andelskasse in some details:

The report elaborates on the destructive influence of KBH’s ownership structure, noting that individuals connected to the Clearhaus Group exercised substantial control over the bank.

The FSA inspection report found that Clearhaus employees had direct access to KBH’s internal systems and informally directed KBH employees’ actions.

Transactions initiated by Clearhaus raised concerns about whether they served KBH’s interests or those of parties related to Clearhaus A/S.

The Danish FSA’s report (the KBH report) details for example 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.

Respectivly the following indicent is described in full detail in the KBH report: 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).

In light of the serious issues identified , the Danish FSA notified Finansiel Stabilitet that KBH was financially distressed. On September 13, 2018, Finansiel Stabilitet assumed control of the bank. Additionally the Danish FSA started to inspected Clearhaus, leading to the findings published in May 2021.

Interconnected Scams: KBH and Clearhaus

Further investigation revealed that KBH and Clearhaus serviced the same questionable shell companies.

A prominent example is Bureau Solutions Limited (now TechToPay Limited).

Bureau Solutions Limited, previously owned by OZON ORK—a well-known figure in the online gaming industry—used KBH bank accounts to launder funds for fraudulent schemes involving Robert Courtneidge and Bobby Gill.

A legal case filed with the London High Court on January 6, 2021 (case number CL-2020-000831), revealed that Clearhaus onboarded Bureau Solutions Limited and processed card payments for the shell company until the end of 2019.

These findings underscore the systemic failures in governance and compliance across both KBH and Clearhaus, highlighting their pivotal roles in enabling fraudulent schemes

No open issues here according to the Danish FSA!

Although tens of thousands of innocent European consumers lost their money to transnational cybercriminal organizations with the support of KBH evidently the FSA has not taken serious actions against Clearhaus A/S.

European victims who lost money to investment scams through Københavns Andelskasse have yet to receive any reimbursement from the Danish bank. Despite being a regulated European financial institution overseen by a European supervisory authority, no one has been held accountable for facilitating the fraud.

All the concerns highlighted in this post were formally raised in a letter sent to the Danish FSA on September 8, 2021. You can download the letter here.