Danish operations of Ernst & Young (EY) and KPMG are now under investigation by Danish police related to money laundering cases.
According to Bloomberg, EY is accused of failing to notify authorities when it discovered red flags related to the Danske Bank money laundering case. Danske, Denmark’s biggest bank, has been under investigation for its role in a $230 billion money laundering scandal centered on its Estonian branch. In February, Danske was ordered by Estonia to close that branch, and has been given only a few months to do so.
For its part, KPMG was the auditor of Kobenhavns Andelskasse, a small Danish lender shut down last year due to concerns it was used to launder money.
“It’s good that the authorities — the Business Authority, the police and the Financial Supervisory Authority — are 100 percent on top of this case,” said Danish Business Minister Rasmus Jarlov, adding it “needs to be investigated all the way.”
In the wake of the Danske scandal, Denmark’s lawmakers are working to create tougher money laundering regulations. In fact, last month new standards were added that included the ability to ban accounting firms from doing business in the country if they don’t do their jobs properly.
In a statement on Friday (April 12), the Danish Business Authority said it came to an “assessment that EY, in connection with its audit of Danske Bank’s reports for 2014, was made aware of information” and that “EY ought to have conducted a closer investigation, and informed the Financial Intelligence Unit.”
Ernst & Young defended its actions in an email statement, noting that its Danish unit “has fully collaborated with the Danish Business Authority since October 2018 and has made available all documents regarding our audit,” and adding, “EY Denmark has reported as required by the then applicable regulation and we will fully cooperate with the State Prosecutor.”
And KPMG said it “reacted and drew attention to, among other things, procedural failures in connection with the area of money laundering, both to the management and the board. The Financial Supervisory Authority also received our reporting,” according to an emailed statement from Anette Harritz, the quality, risk and management partner at KPMG in Denmark. She noted that the company believes it has “lived up to” its role as an auditor.