Danske Bank faces fresh Danish money laundering inquiry

DANSKE Bank faced a new Danish money laundering inquiry on Thursday as political anger spread over a scandal involving 200 billion euros in payments, many of which were suspicious, through Estonia.

Chief Executive Thomas Borgen resigned on Wednesday after an investigation commissioned by Danske Bank exposed control and compliance failings, fuelling calls for more stringent European Union rules after several such scandals.

The bank’s report sparked vocal political criticism and prompted Denmark’s Financial Services Authority (FSA) to revisit a case which it had put on ice earlier this year, but is reported to have attracted the attention of US authorities.

“We’re reopening the investigation of the bank that we initially closed in May,” FSA head Jesper Berg told Danish broadcaster TV2.

In May an FSA report said it had found “serious weaknesses” in the bank’s governance and demanded reforms, as well imposing reprimands and a higher capital requirement.

Mr Berg said the FSA would use the new information from Danske Bank’s report and focus on identifying a legal responsibility.

In an indication of the penalties such lapses can entail, Dutch financial group ING agreed to pay 775 million euros this month after money laundering through its accounts.

One of the main factors behind a dramatic fall in Danske Bank’s share price this year is investor concern that it could have broken US sanctions, which could entail billions of dollars in penalties.

Danske Bank said on Wednesday it had not so far found any breach of sanctions, while chairman Ole Andersen said it had assessed whether it had violated US laws but declined to share its conclusion. While authorities in the United States have yet to say whether they are investigating the payments, many of which came from Russia and other former Soviet states, Danske Bank’s case is already high on the agenda of European Union members.

European Justice Commissioner Vera Jourova said on Thursday she will discuss the Danske Bank case with the finance ministers of Denmark, Finland and Estonia on October 2.

“I want to understand better where the main errors happened, whether it was purely the fault of the lack of due diligence done by the bank itself or whether there was also some mistakes at the level of supervisory authorities,” she said.

Ms Jourova told a news conference in Brussels that she will also discuss the case with the European Banking Authority to see if supervisory mistakes were made.

Danish prime minister Lars Lokke Rasmussen voiced his concern over the failings exposed by the country’s biggest lender, saying he was “shocked” at the scope of the suspicious payments and pushed the bank for more answers.

“The fact that Denmark has been at the centre of money laundering of this size is frankly quite horrible,” Mr Rasmussen said outside a meeting of European Union leaders in Salzburg.