The Danish Financial Supervisory Authority said Thursday (Sept. 20) that it has reopened an inquiry into the money laundering scandal at Danske Bank — the country’s biggest bank.
According to news from The Wall Street Journal, citing the Danish Financial Supervisory Authority (DFSA), the government agency had closed the inquiry but said it would now reopen it. In May it reprimanded the bank and told it to set aside $800 million in capital to cover any potential risks from the scandal. However, the DFSA doesn’t have the authority to slap the bank with fines. The regulator was prompted to reopen the investigation after Danske Bank said this week that employees of its Estonian branch didn’t conduct basic background checks on customers who lived outside the country.
The newspaper noted that the renewed inquiry puts more pressure on Danske, which has seen its stock decline. On Wednesday (Sept. 19), CEO Thomas Borgen announced that he would be stepping down. The Wall Street Journal noted that analysts expect fines to be anywhere from $600 million to billions of dollars if the U.S. decides to institute fines as well.
Earlier this week, the Wall Street Journal reported that Danske Bank officials were aware of problems at its Estonian branch earlier than they indicated. According to the report, citing a correspondence seen by the paper, the bank officials knew the branch had accounts for Russian clients who had been blacklisted. This is the latest indication that Danske Bank officials knew nearly two years before the questionable accounts were shut down that its small but very profitable branch could be involved in an illegal scandal.
In April 2013, the Wall Street Journal stated that the anti-money laundering chief of Danske Bank asked employees in the Estonia branch about the client accounts that had been on a blacklist provided by Russia’s central bank. The email stated that Estonian authorities have repeatedly complained to Denmark banking regulators.
“They have the impression that we do not take the issue very seriously,” wrote Niels Thor Mikkelsen, the bank’s then-compliance executive. He went on to say in the email that the Danish Financial Supervisory Authority was “very worried because they have confirmed to U.S. authorities that we comply with Danish [anti-money laundering] requirements.”