Danske Bank (DANSKE.CO) faces a new Danish investigation into alleged money laundering a day after revealing payments totaling 200 billion euros ($234 billion) through its Estonian branch, many of which were suspicious.
Thomas Borgen, Danske Bank’s chief executive, resigned on Wednesday after an investigation it had commissioned exposed failings in controls and compliance.
The bank’s report prompted widespread political criticism and has persuaded Denmark’s Financial Services Authority (FSA) to revisit a case which it had put on ice earlier this year, but is reported to have attracted the attention of U.S. authorities.
“We’re reopening the investigation of the bank that we initially closed in May,” FSA head Jesper Berg told Danish broadcaster TV2 on Thursday.
While authorities in the United States have yet to say whether they are investigating the payments, many of which came from Russia and other former Soviet states, Danske Bank’s case will be high on the agenda of European Union states.
European Justice Commissioner Vera Jourova said on Thursday she will discuss the Danske Bank case with the finance ministers of Denmark, Finland and Estonia on October 2.
“I want to understand better where the main errors happened, whether it was purely the fault of the lack of due diligence done by the bank itself or whether there was also some mistakes at the level of supervisory authorities,” she told a news conference in Brussels.
She will also discuss the case with the European Banking Authority to see if mistakes were made at the supervisory level.
Danish prime minister Lars Lokke Rasmussen voiced his concern over the failings exposed by the country’s biggest lender, saying he was “shocked” at the scope of the suspicious payments and pushed the bank for more answers.
“The fact that Denmark has been at the center of money laundering of this size is frankly quite horrible,” Rasmussen told reporters outside a meeting of European Union leaders in Salzburg late on Wednesday.
Danske Bank already faces a criminal investigation after the Danish state prosecutor for financial crime said in August it had started its own inquiry.
“The case doesn’t end with this,” the PM said, referring to Wednesday’s report from Danske Bank.
Politicians, who are scrambling to show they take the problem seriously, agreed on a new anti-money laundering law this week that will include an eight-fold increase in the size of fines, making it one of the toughest in Europe.
“It’s a striking management failure,” Jeppe Kofod, who chairs the European Parliament’s special committee on financial crimes, tax evasion and tax avoidance, told Reuters.
“The responsible people should be fired to show that such a failure has consequences,” he said. Danske Bank said on Wednesday it had taken action against former and current staff.
In Denmark, which regularly feature in surveys as one of the least corrupt countries in the world, politicians were critical of Danske Bank for not revealing exactly how much money was laundered and not placing a legal responsibility.
Business minister Rasmus Jarlov told Reuters on Wednesday that Denmark wanted to avoid a scenario like the one in Latvia where ABLV was accused by U.S. authorities of covering up money laundering, leading to the bank being denied U.S. dollar funding and its swift collapse.
“We’re dealing with it here, and we crack down hard on money laundering, and we hope this is being noticed abroad,” he said.
Both Jarlov and Danske Bank’s board chairman Ole Andersen have said they are not allowed to say whether they have been in contact with U.S authorities regarding the case.