Bank Regulation

Danske Fraud Case Leads To Eight Arrests In Estonia


Eight people in Estonia have been arrested in connection to Danske Bank’s money laundering scandal.

According to Reuters, Estonian newspaper Postimees reported on Tuesday (December 18) that “the state prosecutor detained eight people today on official suspicion in the so-called Danske money laundering case.”

A spokesman for the Estonian prosecutor’s office declined to comment on the report, while Danske Bank was not immediately available for comment.

Denmark’s largest bank is being investigated over “massive money laundering flows,” with authorities in Denmark, Estonia, Britain and the United States all looking into $150 million that made its way through accounts of non-Estonian holders. As a result, Danske’s CEO Thomas Borgen announced in September that he would be stepping down, while analysts have predicted that the financial institution’s fines will be anywhere from $600 million to billions of dollars — especially if the U.S. decides to institute fines as well.

The scandal is so big, it has the potential to impact Denmark’s financial stability. “It’s a question of trust, if there is a spillover effect to the rest of the sector. We haven’t seen that yet, but that is the concern,” Karsten Biltoft, assistant governor and head of financial stability, has said.

But the lawyer for the scandal’s whistleblower has said that Danske might be just a small player in the money laundering case. In fact, he has urged investigators to look into whether major Western banks were involved.

“It looks like the tip of the iceberg,” said Stephen Kohn, who is representing Danske whistleblower Howard Wilkinson. “The problem is far bigger than has been reported … If this is properly investigated, and the money followed all the way to the end — it all went to large, multinational Western financial institutions, and either the U.S. government or other authorities have the ability to track down every transfer and any account.”


New PYMNTS Report: Preventing Financial Crimes Playbook – July 2020 

Call it the great tug-of-war. Fraudsters are teaming up to form elaborate rings that work in sync to launch account takeovers. Chris Tremont, EVP at Radius Bank, tells PYMNTS that financial institutions (FIs) can beat such highly organized fraudsters at their own game. In the July 2020 Preventing Financial Crimes Playbook, Tremont lays out how.