Danske Bank was hit with its first criminal charges over a €200bn money-laundering scandal after Danish prosecutors accused it of failing to investigate and report suspicious transactions and having inadequate controls and checks on customers.
The Danish public prosecutor for serious economic and international crime laid four preliminary charges against Danske on Wednesday under the country’s anti-money-laundering act.
Prosecutors accused the bank of not having reported “a significant number of suspicion transactions” to Danish and Estonian authorities over several years.
They also criticised the bank’s board for closing down the Estonian non-resident business at the heart of the scandal “without ensuring that investigations into the customer relations and transactions were made”.
The prosecutors are also investigating whether a criminal case can be made against any Danske managers but has yet to reach a conclusion on this.
Danske said it expected to be charged by Danish prosecutors following the release of its own report — much criticised by investors — into the scandal in September.
“It is in our interest that the case is fully investigated, and we will, of course, co-operate with [prosecutors] and make ourselves, and the knowledge we have, available in relation to the ongoing investigation,” said Jesper Nielsen, interim chief executive.
Danske has lost both its chief executive and chairman as a result of the largest money-laundering scandal yet uncovered. The Danish bank said €200bn of Russian and other ex-Soviet money had flowed through its small Estonian branch between 2007 and 2015 with a “large part” of that thought to be suspicious.
Rasmus Jarlov, Denmark’s business minister, said of the charges: “The money-laundering case is extremely serious, and it is therefore natural, reasonable and necessary that Danske Bank should be charged by the fraud squad.”
Danske is facing other criminal investigations in Estonia and most notably by the US Department of Justice, raising the spectre of multibillion-dollar fines.
Bill Browder, the UK-based financier and Kremlin critic, has called on the US Treasury to invoke the patriot act to stop banks clearing dollars for Danske, a draconian sanction that led to the winding up of Latvian lender ABLV earlier this year.
Danske has argued that its situation is different to ABLV, which was accused by the US of institutionalised money laundering.
Mr Nielsen said that Danske had taken a number of initiatives against money laundering. “The situation is now quite different from what it was at the time of the suspicious activities in Estonia. We will continue to give high priority to this area.”
The four preliminary Danish charges included allegations that the bank had inadequate controls, staff were not trained in anti-money-laundering procedures and nobody was responsible for compliance at management level for some time; that the bank failed to integrate the Estonian branch into its central risk system and check customers’ identities properly; that it failed to check the source of customer funds and whether they posed an increased risk of money laundering and terrorism financing; and that the bank should have investigated and reported suspicious transactions several years earlier.