Danish bank chief quits over €200bn money laundering
21 Sep 2018
The chief executive of Denmark’s biggest bank has resigned after an internal investigation revealed most of some €200bn (£178bn) of payments moved through its Estonian branch was down to money laundering of cash from Russia, the UK and the British Virgin Islands
21 Sep 2018
On stepping down Danske Bank chief executive Thomas Borgen said: ‘Even though I was personally cleared from a legal point of view, I hold the ultimate responsibility. There is no doubt that we as an organisation have failed in this situation and did not live up to expectations.’
Věra Jourová, the European commissioner for justice, has described the Danske case as ‘the biggest scandal…which is also a very unpleasant lesson showing the need to be much more vigilant and for much more prudent checking'.
The bank called in a law firm to conduct an inquiry after it said it was unable to determine how much money was believed to have been laundered through its Estonian branch between 2007 and 2015.
The law firm’s report, published this week, suggested more than half of Dankse’s 15,000 customers in Estonia were suspicious, and also alleged that some staff may have been involved in helping customers get round background and security checks.
Finantsinspektsioon, the financial services regulator for Estonia, said it will now be considering possible action to be taken, together with the Danish financial supervision authority, which is the primary home supervisor of the bank.
Kilvar Kessler, chairman of Finantsinspektsioon, said: ‘The investigation report of Danske Bank confirms the results of supervisory proceedings conducted by Finantsinspektsioon at Danske Bank Estonian branch in 2007-2015 and is clear evidence of the extent of the deficiencies that existed at the bank.
‘The report describes serious shortcomings in the organisation of Danske Bank, where risk-appetite and risk control were not in balance.’
Finantsinspektsioon carried out thorough on-site inspections in 2014 and following these it ordered Danske in 2015 to rectify its flawed risk control. As a result, Danske exited the market serving non-resident customers.
The Financial Times has reported that the National Crime Agency (NCA) has opened an investigation into a UK-registered LLP which may have been involved. By geography, UK corporate entities were the second-biggest proportion, behind Russian, of 15,000 non-resident customers at the Estonian branch of Danske.
In a statement to the paper, the NCA said: ‘The NCA is aware of the use of UK registered companies in this case and has related ongoing operational activity. The threat posed by the use of UK company structures as a route for money laundering is widely recognised and the NCA is working with partners across government to restrict the ability of criminals to use them in this way.’
Report by Pat Sweet