Published: Sun, September 23, 2018
Economy | By

Danske Bank hit with new money laundering probe

Danske Bank hit with new money laundering probe

The NCA's comments come after the Financial Times reported Thursday it had opened a criminal investigation into an unidentified United Kingdom -registered limited liability partnership, with links to the Danske Bank branch at the centre of the scandal.

In a statement, the chairman of the board of directors, Ole Andersen said: "There is no doubt that the problems related to the Estonian branch were much bigger than anticipated when we initiated the investigations". If the case draws the attention of U.S. authorities, the fallout could be even more significant.

Danske CEO Thomas Borgen resigned on September 19 after an investigation commissioned by Danske exposed control and compliance failings at the branch between 2007 and 2015. The audit idenitifed that most of the 10,000 non-resident customers of the bank's Estonian branch were suspicious and it is likely that most of the transaction flow of the bank was also problematic.

"The fact that Denmark has been at the centre of money laundering of this size is frankly quite disgusting", Rasmussen told reporters outside a meeting of European Union leaders in Salzburg.

"When we receive new information, we can review it and see if there is anything else we need to examine", he added. We have been following the case since May.

Denmark's central bank said on Friday that it supported a proposal for tougher laws on money laundering agreed by politicians on Wednesday.

The investigation of Danske Bank's alleged money laundering has uncovered new funds.

Jourova told reporters that she will meet with the finance ministers of Denmark, Estonia and Finland in October to better understand "where the main errors happened" at Danske Bank and whether supervisory authorities had also been at fault. "But that just makes it even more important that we handle things thoroughly in Denmark, to make sure nobody elsewhere is left with the impression that we're not coming down severely on this".

"It's a striking management failure", Jeppe Kofod, who chairs the European Parliament's special committee on financial crimes, tax evasion and tax avoidance, told Reuters.

"We are following and analyzing the situation closely".

But it was unable to explain exactly where the money came from, saying only that 23 percent of the incoming funds were from Russian Federation.

Danske's shares, which have lost 28% of their value so far this year, rose 4.5% on Thursday after UBS advised clients to buy the shares. "The 87-page report on the non-resident portfolio contained a number of positives in our view", Johan Ekblom, a UBS analyst said in a note referring to the lack of a formal USA investigation.

Bloomberg Intelligence estimates Danske may have to pay more than €1 billion (RM4.97 billion) in total, while a Bloomberg News survey points to about US$800 million (RM3.31 billion), roughly matching the amount that Deutsche Bank AG and ING Groep NV paid for similar misdeeds.

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