Danske Bank Faces Hefty Fine in Denmark: Neglecting Money Laundering Investigations in Estonia
Danish Court Orders Substantial Penalty for Danske Bank
The Danish lender, Danske Bank, will pay a fine of 3.5 billion kroner ($513 million) and forfeit an additional 1.2 billion kroner ($178 million) following a Danish court’s decision for neglecting suspicious transactions at its Estonian branch [1].
Court’s Findings: Lapses in Identifying Beneficial Owners and Reporting Suspicious Transactions
The court’s decision stems from Danske Bank’s admission of falling short in:
- Identifying ultimate beneficial owners
- Monitoring transactions
- Reporting suspicious activities
- Maintaining communication between its Copenhagen executive board and Estonia management
This occurred despite receiving whistleblower reports and media coverage suggesting potential money laundering on an enormous scale [2].
Delayed Response: Danske Bank Ignored Early Warnings
The Danish Public Prosecutor’s Office indicated Danske Bank waited over two years to shut down its Estonian branch’s non-resident portfolio after the initial 2013 report from a former Danske Bank manager in Copenhagen [2]. Allegedly, more than $240 billion was being laundered through Danske’s Estonian operations to western banks.
Insufficient Communication and Inadequate Response to Whistleblower Reports
According to the Copenhagen hearing, Danske admitted that communication between its Danish headquarters and its Estonian management was insufficient, and its whistleblower reports and media allegations were not adequately addressed [2].
Ongoing Investigations
The penalty comes amidst ongoing investigations by U.S. and Danish authorities into Danske’s Estonian activities. In a separate development this month, Danske pleaded guilty to bank fraud charges in the U.S. and agreed to pay $2 billion to the Department of Justice and Securities and Exchange Commission to settle the investigations into its anti-money laundering procedures [3].
Closure of Baltic Operations and Increasing Focus on Anti-Money Laundering Systems
Danske Bank ended all its operations in the Baltic countries three years ago. The recent developments against Danske Bank are part of an increasing focus on financial institutions’ anti-money laundering systems from various countries’ governments.
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[1]: “Danske Bank faces hefty fine over Estonia money laundering failures” https://www.bbc.com/news/business-58877888 [2]: “Danske Bank Faces Record Fine of $563 Million in Money Laundering Case” https://www.wsj.com/articles/danske-bank-to-pay-record-fine-in-money-laundering-case-11617299302 [3]: “Danske Bank A/S” https://en.wikipedia.org/wiki/Danske_Bank