Danske Flags More Than $230 Billion in Transactions Related to Money-Laundering Probe

[f2wohf]

The scope of an already massive Russia-linked money laundering case swelled Wednesday when Denmark’s largest bank said more than $230 billion in transactions flowed through its tiny Estonian branch, a larger amount than previously reported.

Danske Bank Chief Executive Thomas Borgen resigned as the bank published results of a year-long investigation into how its operation in the Baltic former Soviet Republic turned into a hub for illicit flows out of Russia and other ex-Soviet states into the West. The report said a “large portion” of the transactions are likely related to money laundering, but it said that after a year of studying the issue, it couldn’t determine how much.

“It is clear that Danske Bank has failed to live up to its responsibility in the case of possible money laundering in Estonia,” the company said, adding the investigation didn’t find breaches of Mr. Borgen’s legal obligations. It did however cite him for failing to inform its board of directors of and internal report about the matter as early as 2014, more than a year before the questionable accounts were shut down.
The Wall Street Journal reported earlier this month that as much as $150 billion of transactions were being examined. The enlarged number disclosed in the report—€200 billion ($233 billion)—included more than 6,200 client accounts “deemed suspicious,” indicates that the problems facing the bank are more serious than previously thought. Danske Bank shares fell as much as 7% in European trading and have lost a third of their value this year.

U.S., Danish and Estonian authorities are all probing the case. The Danish and Estonian banking supervisors separately said Wednesday they will look into the latest findings to decide whether to take further steps against the bank. In May the Danish supervisor told Danske to set aside $800 million in capital to handle any risks.

The biggest risks for Danske could come from the U.S. Under U.S. rules, the Treasury could fine the bank, or order U.S. regulated banks to cut Danske’s access to U.S. dollars, particularly if it finds the lender violated U.S. sanctions. The bank declined to comment on ongoing investigations in a press conference, but the report said so far there were no findings of sanction violations.

The sum of €200 billion, while not all having been identified as illicit, is a significant amount of money, equal to nearly half of all Russian central government spending in 2015 or 26 times the rate of overall government spending in Estonia in 2015, the year most of the accounts were shut. It’s also equivalent to two years of exports from Denmark.

https://www.wsj.com/articles/danske...ected-of-money-laundering-1537345254?mod=e2tw

 

[Frequent visitor]

The perceived corruption index usually shows Denmark up at the top, i.e. relatively corruption free. Makes you think.

 

[Okty]

I am surprised it's not a Swiss bank.

 

[Azg]

That's a surprisingly large amount of moeny not to have been flagged before. R3.5 trillion? More than double SA's budget.

 

[BeerIsNotGood...]

The perceived corruption index usually shows Denmark up at the top, i.e. relatively corruption free. Makes you think.

Think what exactly?

 

[surface]

The perceived corruption index usually shows Denmark up at the top, i.e. relatively corruption free. Makes you think.

I see what you mean. Surely, this is just one incident so far? Or one black spot on a cloth makes entire cloth dirty kind of thing?

 

[Frequent visitor]

Think what exactly?

Well for one, how reliable a measure of honesty the PCI is. That leads on to the value of perceptions as a guide.

 

[Frequent visitor]

I see what you mean. Surely, this is just one incident so far? Or one black spot on a cloth makes entire cloth dirty kind of thing?

You raise the point quite correctly. However I have come across three Danish companies trading in Eastern Europe and Africa dishonestly by undeclaring the value for duty, using false invoices. So I was not surprised to find this case. Very often such revenue frauds need the cooperation of banks to avoid detection during post clearance audits.
Still just a sample though.

 

[surface]

You raise the point quite correctly. However I have come across three Danish companies trading in Eastern Europe and Africa dishonestly by undeclaring the value for duty, using false invoices. So I was not surprised to find this case. Very often such revenue frauds need the cooperation of banks to avoid detection during post clearance audits.
Still just a sample though.

I agree - just a sample.

Take Denmark corruption and multiply it by 10 - this will still be much less than what happens here. It certainly looks like CR is on right track though.

 

[Frequent visitor]

I agree - just a sample.

Take Denmark corruption and multiply it by 10 - this will still be much less than what happens here. It certainly looks like CR is on right track though.

You could be right on the estimate. I would agree with you re CR, but it will not be easy for him, as you can see.

 

[Gordon_R]

Thread necro. The investigation has come to a dead end: https://www.bbc.com/news/business-49824367

The former head of Danske Bank's arm in Estonia has been found dead days after he went missing.

Police had been searching for Aivar Rehe since he left his home in Tallinn on Monday.

Mr Rehe was a witness in an ongoing money-laundering investigation, but not a suspect.

The bank is under investigation in several countries for payments of about €200bn (£177bn) through its Estonian branch between 2007 and 2015.

Mr Rehe headed Danske Bank's Estonian branch during that time.

Police had said on Monday that they feared for Mr Rehe's life, but added that they did not suspect third party involvement.

Danske Bank chief executive Chris Vogelzang said trust in the bank had collapsed since the scandal.

The high level of trust in Denmark, which enjoys a reputation as being one of the least corrupt nations, meant that there had been fewer incentives to control risks, which led to problems outside the Nordic region, Mr Vogelzang said.

"Thieves and criminals will rather go to the weak spots than to the stronger spots. And... my bank had weakened defences. It was not bad faith, we just weren't organised," he said.

 

[TooFastTim]

The investigation has come to a dead end