Amid a U.S. investigation into money laundering at Danske Bank’s Estonia branch, shares of the bank have reached the lowest level in four years on Friday (October 5). Danske stocks were trading at 149 crowns as of 14:57 G.M.T., and the bank is trying to comfort investors, Reuters reported.
Danske Bank’s interim chief financial officer Morten Mosegaard noted that the U.S. DOJ financial crime inquiry differs from that of ABLV in Latvia. In that Danske scandal, the bank experienced a fast fall after it was denied dollar funding after the U.S. Treasury put forward the possibility of using a part of the USA Patriot Act. Mosegaard, however, told the newswire that “it’s very difficult to see any comparison between the two cases.”
In this case, Danske Bank shut down its Estonian activities. And Mosegaard wrote in a note that it is “more likely” that the DOJ won’t use the Patriot Act, but “substantial fines from both European regulators and U.S. regulators are a possibility.” In addition, he said that the bank can access dollars through a “solid network of correspondent banks.”
The news comes as the the Wall Street Journal reported in September that U.S. law enforcement agencies were examining Danske Bank over what has been termed “massive money laundering flows” from Russia and several former Soviet states. The agencies probing the fund flows include the Securities and Exchange Commission (SEC), the Treasury Department and the Justice Department.
The WSJ said its information came from an unnamed source “familiar with the matter” in tandem with documents related to the probe that had been seen by the financial publication. The probes are ongoing, and relate to transactions in turn tied to the bank’s Estonian branch – and focus on $150 million of money that made its way through accounts of non-Estonian holders.
The investigations join those being conducted from authorities based in other nations, including Denmark. Estonia is conducting its own investigation, and as CNBC reported, officials in that country are looking at two dozen Danske employees who had been based there. Those employees, in a roster that includes the branch’s chief executive office, are accused of helping launder $230 million that came from Russia.