The Danish Financial Supervisory Authority has published a sector update and an accompanying report summarising where its 2023–2026 inspections of banks and mortgage credit institutions resulted in supervisory orders to address weaknesses in their compliance functions. The inspections covered large, medium-sized and smaller institutions and, according to the Authority, have contributed to improvements. Recurring issues included inadequate procedures for compliance work; insufficient attention to compliance requirements in specialised legislation; incomplete assessment of compliance risks across material areas; testing that verified policies and procedures against legislation but did not check whether business units followed them in practice or whether controls worked as intended; weak challenge of business units’ own compliance risk assessments; unclear allocation of responsibilities with the risk management function and insufficient consideration of risk management’s monitoring of compliance risks on financial-risk topics where it had that role; risk assessments that were missing or not linked to the compliance activity plan; inadequate follow-up on deficiencies identified by compliance reviews or by business units; insufficient independence from business units; inadequate resources and expertise; and reporting to the board and executive management that was insufficient, or insufficient consideration of the reporting by the board and executive management. The Authority pointed to sections 17 and 23 of the Executive Order on Management and Governance of Banks (and other legislation) as key sources of requirements for the compliance function.
Danish Finanstilsynet 2026-04-21
Danish Financial Supervisory Authority publishes report on compliance function deficiencies leading to orders for banks and mortgage credit institutions
The Danish Financial Supervisory Authority has issued a sector update and report on its 2023–2026 inspections of banks and mortgage credit institutions, highlighting cases where supervisory orders were issued to remedy weaknesses in compliance functions. Recurring deficiencies included inadequate procedures, incomplete compliance risk assessments, weak testing and follow-up, unclear responsibilities vis-à-vis risk management, insufficient independence and resourcing, and inadequate reporting to boards and executive management. The Authority cited sections 17 and 23 of the Executive Order on Management and Governance of Banks as key compliance function requirements.