In a week that saw the Australian banking industry under scrutiny, Danske Bank has also been extensively criticised and reprimanded by Danish regulators over weak or non-existent money-laundering controls that gave rise to suspected “criminal activities involving vast amounts of money”.
The Danish Financial Supervisory Authority on Thursday gave the country’s largest bank eight reprimands and eight orders over money-laundering allegations in its Estonian operations, including the need to set aside DKr5bn ($805m) in capital to cover compliance matters.
The FSA uncovered “serious weaknesses in the bank’s governance” that meant it “is exposed to significantly higher compliance and reputational risks than previously assessed”. Thomas Borgen, Danske’s chief executive, said he took the criticisms “very seriously”. He added: “Today it is clear that we did too little too slowly. There is unfortunately nothing we can do to change that. Instead, we need to ensure that it cannot happen again.”
Danske launched an investigation last year into allegations that its Estonian branch was used from 2007-15 for money laundering from countries including Russia, Azerbaijan and Moldova. There are significant questions about what senior management knew when, and why they failed to act sooner. The probe could raise questions for Mr Borgen, who has been Danske’s chief executive since 2013 and was head of international banking including in Estonia for four years before that.
Jesper Berg, head of the Danish FSA, told the Financial Times it was “an exceptionally unfortunate situation”. He added: “The bottom line is that Danske Bank’s management has reacted too late on information they have received on the deficiencies of anti-money laundering policies and practices in Estonia and of possible involvement of shady characters.”
The criticism of Danske is only the latest in a series of embarrassments for European banks and regulators over anti-money laundering. The ECB this year has forced a Latvian and an Estonian bank to close due to lax controls while Sweden’s Handelsbanken and Nordea are among bigger lenders to receive criticism.
The post Danske Bank in trouble over weak anti money-laundering controls appeared first on Payments Cards & Mobile.