Deutsche Bank’s Exposure Grows In Danske Money Laundering Probe

Deutsche Bank’s exposure to the Danske Bank money laundering scandal has increased after the bank found it processed an additional €31bn of suspicious funds for Danske Bank than previously thought, reported Financial Times.

The report, citing people familiar with the matter, reported that in addition to the $150 billion (€132bn) that Deutsche Bank cleared for Danske’s Estonian branch from 2007 to 2015, it also processed another €31bn. That amounts to Deutsche Bank processing four-fifths of the €200bn that Danske said came from its Estonian branch from clients in Russia and other former Soviet countries. According to Financial Times, roughly one million transactions were processed by the German bank during that period.

The increased exposure places even more pressure on Deutsche Bank, which is facing intense scrutiny from regulators in the U.S. and Europe. The U.S. Department of Justice has already requested information from the bank covering its role in the Estonian branch of Danske Bank. A senior Deutsche Bank source told Financial Times that the bank was cooperating with “inquiries from a number of authorities” covering the Danske transactions.

According to the report, Deutsche Bank stopped clearing dollars for the Estonian branch in 2015 after internal controls started flagging an increasing amount of transactions that were deemed suspicious. The bank told Danske in the same year that despite a reduction in payments from Estonia in the past two years, there was an increase in the suspect cases that it was having to investigate. In three months, the bank said it had flagged 16 cases linked to drugs and identity theft. Financial Times noted that Deutsche Bank filed hundreds of suspicious activity reports about the branch to supervisors.

In late November, preliminary charges had been filed against Denmark’s biggest lender, Danske Bank, over allegations that it violated the country’s money laundering laws, according to a report by Reuters at the time. The charges are related to the bank’s branch in Estonia. Prosecutors are trying to determine if they can pursue charges against the bank itself or if individuals can be found culpable, General Prosecutor Morten Niels Jakobsen told Reuters in a statement.