Thursday, 18 April 2024
Danske Bank releases statement regarding money laundering investigations in Estonia
Investigations of Danske Bank’s branch in Estonia
In September 2017, Danske Bank launched thorough investigations into its branch in Estonia on the basis of suspicions that the branch was used to launder many billion kroner in the period from 2007 to 2015.
Our responsibility
As a bank, we have an important responsibility for contributing to the combating of money laundering and other financial crime. We must know our customers and make sure that we detect and report suspicious transactions to the authorities. Every year, we allocate considerable resources to this work. Today, more than 1,000 employees at Danske Bank work in this area, and over the past year alone, we have sent almost 9,300 reports to the authorities regarding suspicious matters.
That is why we take the matter regarding possible money laundering at our branch in Estonia very seriously and wish to get the bottom of it and to understand how something like that could potentially take place.
"We take the issue very seriously. That is the reason why we have launched thorough and comprehensive investigations of the conditions in Estonia. We fully understand the extensive interest in the matter, and we are strongly committed to getting to the bottom of it and sharing our conclusions. I believe that it is in everybody’s interest that the investigations are as thorough and exhaustive as possible, since this is also what the severity of the case requires. For these reasons, it is important that we are patient and await the presentation of the findings in September. Should the investigations uncover misconduct on the part of employees or managers, we will of course ensure that the necessary steps are taken."
- Olen Andersen, Chairman of the board of directors, Danske Bank
What we are investigating
In September 2017, in continuation of a so-called root cause analysis, we launched thorough and comprehensive investigations of Danske Bank Estonia. The investigations are overseen by Danske Bank’s Board of Directors and led by external law firms in cooperation with international experts.
This is a complex case, and the material examined is massive, consisting of documents, presentations, millions of emails and very large volumes of transaction data. That is why the investigations are taking time, but we expect to be able to present key findings at the latest in September 2018.
Generally, the investigations focus on two separate things:
- A thorough examination of customers and transactions at the Estonian branch in the period from 2007 to 2015. This examination will uncover the extent of suspicious transactions, and we will report any relevant matters that have not already been reported to the authorities. It will also determine whether there are employees who, actively or otherwise, contributed to such transactions.
- An examination of who knew what and when, both in Estonia and at Group level, and to determine whether managers and employees lived up to their responsibilities to a sufficient degree.
The investigations are overseen by Danske Bank’s Board of Directors, and the Board receives regular updates. The law firm Bruun & Hjejle leads and supervises the investigations and will prepare the final report once the investigations have been completed. The investigation of all foreign customers and transactions at the Estonian branch from 2007 to 2015 is conducted by Danske Bank’s Compliance Incident Management Team, headed by Jens Madsen, former head of Denmark’s intelligence agency and the Fraud Squad (PET and SØIK). The investigations are also conducted in cooperation with Danish and international experts:
- The international data analysis software company Palantir Technologies. This company provides a platform for analysing the original transaction and customer data.
- The consultancy firms PwC and EY. They provide forensic experience.
Timeline
December 2013: An email from an internal whistleblower points, among other things, to a lack of controls and procedures at Danske Bank’s branch in Estonia. The contents and allegations in theemail are investigated.
February 2014: Danske Bank’s Internal Audit initiates an audit on the basis of the email from the whistleblower and hires KPMG to conduct further investigations.
March/April 2014: On the basis of the audit and the investigation conducted by Internal Audit and KPMG, Danske Bank concludes that the control environment has been inadequate. All onboarding of new customers ceases.
2014-2015: The non-resident portfolio in Estonia is closed down.
March 2017: Several media run articles about Russian money laundering, and Danske Bank decides to conduct a root cause analysis of the suspicious transactions in the now closed-down non-resident portfolio. The analysis concludes that the lack of control is due to inadequate focus on the combating of money laundering in Estonia, a lack of focus on governance in relation to compliance and risk, and management follow-up being highly dependent on local country management. The analysis is conducted by the Promontory Financial Group consultancy firm.
September-November 2017: The investigations are expanded to include two separate things: A thorough investigation into customers and transactions in Estonia in the period from 2007 to 2015, including whether employees have, actively or otherwise, contributed to suspicious transactions; and an investigation into who knew what and when, both in Estonia and at Group level. Both investigations are overseen by the Board of Directors and led and supervised by external law firms in cooperation with international experts.
April 2018: Lars Mørch, Member of the Executive Board, resigns from his position. The investigation into matters relating to the Estonian non-resident portfolio has not been completed, but it is clear that Danske Bank should have launched more thorough investigations at an earlier time than we did, as this would have provided an understanding of the extent of the problems, in turn leading to swifter action.
May 2018: The Danish Financial Supervisory Authority announces its decision in the case.
Comments on recent media cases
“As we have said earlier, it is too soon to draw any conclusions about the extent of potential money laundering in Estonia. That is the reason why we have not ourselves published figures or commented on speculations about potential amounts. On several occasions, however, we have said that the extent seems to be somewhat larger than previously estimated. Until the investigations launched have been completed in September, though, it would be wrong to speculate any further. But there is no doubt that even one krone laundered is one too many, and that we take this matter very seriously. We cannot comment on specific businesses, but all customers in the Estonian portfolio, which was closed down several years ago, are investigated. And we report findings to the authorities on an ongoing basis to the extent that this has not already been done.”
- Anders Meinert Jørgensen, Head of Group Compliance at Danske Bank
Re-disseminated by The Asian Banker
