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Danske Bank faces US investigation into money laundering

Danske Bank faces US investigation into money laundering

Denmark’s largest bank cooperating with Department of Justice over Estonian branch.

Danske Bank faces a criminal investigation by US authorities over a €200bn (£177bn) money-laundering scandal involving its Estonian branch.

Denmark’s largest bank said on Thursday that it had “received requests for information from the US Department of Justice in connection with a criminal investigation relating to the bank’s Estonian branch”.

The bank, which this week appointed Jesper Nielsen as interim chief executive to handle the crisis in the short term after the resignation last month of Thomas Borgen, said it was cooperating with the US authorities.

Danske shares fell by 3% to 160 Danish kroner, their lowest level since January 2015, as its investors and customers digested the US investigation and the bank’s decision to halt a share buyback programme to bolster its capital. The shares have fallen by 33% so far this year.

The mayor of Copenhagen, Frank Jensen, said the Danish capital was looking into ending its cooperation with the bank as a result of the unfolding scandal.

An analyst with the investment banking firm Jefferies, Kapilan Pillai, said: “We think a fine of $6bn, unlikely in our view given no sanctions/terror violations have been uncovered as yet after investigating high-risk customers, is already reflected in the price.”

The French bank BNP Paribas reached a record $8.9bn (£6.8bn) settlement with US authorities in 2015 to resolve claims that it violated sanctions against Sudan, Cuba and Iran.

Many of the non-resident accounts at Denmark’s Estonian branch were held by entities or individuals in Russia, which is the subject of US sanctions.

Banks doing business in Estonia handled more than $1tn in cross-border flows between 2008 and 2017, the country’s central bank said on Wednesday.

Sweden’s Swedbank said on Thursday there were “no ongoing investigations” into its anti-money laundering practices. Nordea, the Nordic region’s biggest bank, also said it was not under investigation over alleged money laundering in the Baltics.

In a sign of the impact that criminal and regulatory investigations in Estonia, Denmark, Britain and now the US are having, Danske Bank said it would end its share buybacks after reassessing its capital targets.

Last month the bank said in an internal report commissioned by Borgen that payments totalling €200bn, many of which it described as “suspicious”, had been moved through its Estonian branch between 2007 and 2015.

The findings of the report led to Borgen taking “ultimate responsibility”, although he said he was cleared from a legal point of view, and prompted renewed action by regulators.

Danske’s board has asked Denmark’s financial supervisory authority to approve the appointment of its head of wealth management, Jacob Aarup-Andersen, as its new chief executive, the Danish business website Finans reported, citing several unnamed sources.

The FSA is due to make a decision next week, Finans added. The regulator and Danske Bank declined to comment.

Politicians in Europe are calling for stricter measures to prevent money laundering after the Dutch financial group ING was fined €775m last month after admitting criminals had been able to launder cash through its accounts.



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