FINANCE & ECONOMICS

Combatting money laundering: a difficult conversation is much needed

How do we address the latest criminal trends? Is the solution more technology? More knowledge? New procedures? Does everybody assume their share of the responsibility? All cards are on the table when private companies, public authorities and academia must discuss the combat of money laundering.

Af CBS Leadership Centre

Professionals linked to a washing machine by a cable: illustration of money laundering

Lately, the Danes have been able to follow a rather extraordinary gallery of characters in the TV2 documentary “Den sorte svane (the black swan)”. The mole, Amira Smajic. The biker, Fasar. The lawyers, Nicolai Dyhr and Lise Roulund. And the businessman, Martin Malm.

From a Copenhagen office kept under constant surveillance this documentary provides viewers with insight into how hard-boiled criminals, esteemed lawyers and businesspeople apparently work together to commit extensive fraud, particularly in laundering money. Invoice fraud, tax evasion and shady transactions flow from the underworld to the legitimate world and back again.

Politicians have responded by wanting to tighten the rules, but according to Kalle Johannes Rose, Associate Professor at the Department of Accounting at CBS, who specialises in financial crime and money laundering, additional initiatives are necessary.

”I understand the reactions. And in reality, the documentary only unveils a microscopic part of a massive problem, so action is most definitely needed. But legislation is not the primary issue. The overall problem is the lack of coordination between those who are to enforce it,” says Kalle Johannes Rose, who is a former employee at the Danish Financial Supervisory Authority.

"Imagine Denmark at war, with the army, air force and navy completely unable to communicate with each other."

Kalle Johannes Rose, Associate Professor

Soldiers without a general

Contrary to what some people might think, numerous stakeholders, including public authorities and private companies, are obliged to combat money laundering.

The public part constitutes the Ministry of Industry, Business and Financial Affairs, the Ministry of Justice and the Ministry of Taxation as well as a number of different authorities and agencies. The private sector includes thousands of representatives from the banking and accounting industries, Finance Denmark, Danske Spil and the Danish Bar and Law Society. They are under the obligation to report to the public authorities if they encounter any clients engaging in bank transactions or business practices that raise suspicion of financial crime.

”You can say that we have thousands of soldiers to defend the economy of this country and prevent black money from entering the circular flow, but there is no general to coordinate the soldiers. It is up to each soldier to construe what is the right strategy and how the job is best approached. And no one knows whether the accountant, lawyer or the tax industry have the same approach and risk assessment,” Kalle Johannes Rose points out and adds:

”Imagine Denmark at war with the army, air force and navy completely unable to communicate with each other. Currently, the efforts against money laundering are often based on individuals than entire organisations, and that is just not as efficient.”

Forum for money laundering at CBS

Kalle Johannes Rose is one of the organisers of a conference on fighting money laundering at CBS that took plavce in August. Rose looked at engaging with decision-makers, experts and other stakeholders from the industries responsible for preventing money laundering. The participants helped assess the best ways to establish a collaboration aimed at contributing to the goals of the national money laundering strategy.

“Banks exemplify an industry that once took their responsibility too lightly but have now embraced their role with real commitment.”

Kalle Johannes Rose, Associate Professor

”The constant flow of new money laundering scandals have long demonstrated a need for a more systematic approach to solving this issue. We must identify vulnerabilities contributing to new types of money laundering and find solutions enabling us to establish a new framework for more effective anti-money laundering efforts in the future,” says Kalle Johannes Rose and adds:

”Some of the conversations might be difficult because of our different cultures, however, we cannot only be driven by rules and duty, there must be a societal commitment and a collective wish to maximise efficiency in combatting money laundering. The banks exemplify an industry that once took their responsibility too lightly but have now embraced their role with real commitment.

The CBS researcher further refers to Denmark's 2022-2025 national strategy for preventing and combatting money laundering and terrorist financing, accoridng to which: ”The authorities must collaborate with relevant actors, including, for instance, academia who has knowledge of money laundering and terrorist financing.”

Criminals launder more money than Lego earns

There is a clear need to take action if we are serious about fighting those who see money laundering as something else than running cash through the wash. The Danish Money Laundering Secretariat thus estimates that criminals launder around DKK 68 billion annually.

And according to Kalle Johannes Rose, this is probably an underestimate. The real figure may very well be twice as much, however, the conservative estimate of DKK 68 billion indicates that the combined turnover of the criminal underworld and legitimate sectors surpasses that of the LEGO Group and its 17,000 employees, which reported a net turnover of DKK 65.9 billion last year.

”Clearly, we cannot stop crime, but by curbing the illegal flow of money, we can significantly reduce the incentive to commit crime and ensure a flow of money that is much more beneficial to society,” Kalle Johannes Rose states.

Kalle Johannes Rose

Associate professor at the Department of Accounting at CBS.
Holds a PhD in property law.
Primary research areas are law and economics, money laundering, game theory, and climate law and economics.

A person holding bank notes that are flying away and a mobile phone, illustrating the move towards a more digital economy in Denmark

Cash or Card?

Two figures and a speech bubble with "A"

Translation is necessary and essential for strategy work

Behavioural investing

A new strategy is one thing – realising it is something else

Did you find this content interesting? Sign up for our newsletter and gain access to more of our research findings and events.

With the world’s grand challenges awaiting us, we need to continuously evolve, gain new knowledge and insights, and upskill.

Dive into a world of knowledge by signing up below. You will get:

Personal event invitations
Pertinent research-based insights on business and society
Information about the next intakes of our Executive Education programmes and courses

Compliance and money laundering prevention

Money laundering is a global phenomenon that threatens economic stability, social order and national security. This HD course focuses on providing tools for an effective and risk-based approach to prevent and combat money laundering. Course in Danish 🇩🇰.

Learn more

Master of Business Development

The degree for those who are passionate about creating new, innovative solutions and want to take responsibility for elevating and developing the business - for those who want more

Learn more

Executive MBA

CBS EMBA’s unique programme design and real-world applicability provides the platform for you to navigate a turbulent global business environment and become a leader in business who can steer your organisation to sustainable impact and success.

Learn more

Combatting money laundering: a difficult conversation is much needed

"Imagine Denmark at war, with the army, air force and navy completely unable to communicate with each other."

“Banks exemplify an industry that once took their responsibility too lightly but have now embraced their role with real commitment.”

ABOUT THE RESEARCHER

Keep reading

Your gateway to more knowledge

Keep learning