Explaining Danske Bank’s €200 Billion Money Laundering Scandal

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Danske Bank has been caught up in one of the largest-ever money laundering scandals. Howard Wilkinson, the whistleblower who first alerted Denmark’s biggest bank to the problem, testified before the Danish parliament on Monday.
A HUGE SCANDAL HOW?
200 billion euros ($ 227 billion) in payments, 2007-2015 between the non-resident portfolio of the small Estonian branch of Danske Bank passed. In September, the Bank issued a report stating that most of these payments were suspicious.
DO YOU HAVE THIS MONEY?
In the report, most of the payments came from Estonia, Russia, Latvia and Cyprus and the UK. Former president Ole Andersen told Reuters that Shell companies were used to conceal their identity.

AND WHERE WENT?
In the report, payments, Estonia, Latvia, China, Switzerland, Turkey, United Kingdom and more than 150 went to another country.

WHISTLE DUVET?
Howard Wilkinson, head of the Bank’s trading unit from 2007 to 2014, warned the board of directors in Copenhagen in 2013 and 2014 about suspicious activities in the Estonian branch of the Danish Berlingske newspaper, which he reported in September 2013.

WHY IS THE DIRECT AUTHORIZED INACTIVE?
Denmark’s financial observer faces an investigation by the European Union’s banking responsible, and the business minister in Denmark criticized the organizer because he was not critical of the bank and wasn’t too trusted.

IS NOT RESPONSIBLE?
Not yet. The case is under criminal investigation in Denmark, Estonia and the United States. The investigation of the Danish public prosecutor includes that senior management can be held personally responsible. The UK Department of National Crimes (NCA) said it was investigating the use of UK registered companies.

RESULTS FOR THE DANSKE BANK
Denmark’s financial regulator said the bank’s compliance and reputational risks increased and capital requirements increased by 10 billion Danish kroner ($ 1.5 billion). The Mayor still ruled the case in May, giving eight orders for reforms and eight condemnations.
GET ANY OF BLAME?
The former general manager of Danske Bank, Thomas Borgen, said that although he was “cleaned personally from a legal point of view,” he was holding “ultimate responsibility”. The Maersk family, which controls about 21 percent of the Bank’s shares, overthrew President Ole. He was nominated to take over Karsten Dybvad, who chaired Andersen and the Confederation of Danish Industries.

WHAT IS DANSKEEDS SHARING?
Danske Bank shares are traded at 3 percent at the end of February. In fact, the revenue report on November 1, despite the scandal, increased lending in the third quarter. [See Thompson Reuters’ chart detailing the timeline for Danske Bank’s share price decline: https://tmsnrt.rs/2PvfSwZ].

WHAT IS THE NEXT FOR DANSKE BANK?
The US investigation is worrisome for Danish shareholders. The fines of the US are bigger than those in Denmark and Estonia and in general Europe. For many, the worst-case scenario has the same fate as the Latvian bank ABLV, which lost access to dollar funds when the bank accused the US of laundering money in February and forced it to close. Danske Bank said that two incidents cannot be compared because they suspected part of Estonia’s business in doubt. US authorities also claimed that ABLV violated sanctions imposed on North Korea. Danske Bank has said it has not identified any sanction violations.

Are LOW PROBLEMS FOR DENMARK?
Danske Bank is an integral part of the Danish business and the scandal comes as a government tax scandal, and a fraud case in the ministry of social affairs has shaken the trust of institutions in the welfare society. In September, the Systemic Risk Council has a risk to Denmark’s financial sector. This leads the government to increase the number of cash pads that financial firms must have in order to protect against economic shocks.
WHAT DOES THE BANK OFF?
Danske Bank acknowledged that money laundering controls in Estonia are insufficient. However, he did not violate the legal obligations of the board in the September report. Since then, the Bank has increased its compliance efforts with approximately 1,000 of its 20,000 employees.

ONLY THE DANSKE BANK?
In his statement to Wilkinson’s lawyer Reuters, Danske might just be the sadece tip of the iceberg ç, and researchers should study large Western banks.

HOW TO PREVENT A REPEAT?
Denmark plans to strengthen its financial regulator, with a large majority in the Danish Parliament deciding to tighten money laundering offenses, including up to 700 per cent fines. The two EU sources told Reuters that the rules of the European Union are still being reviewed for the monitoring of banks against money laundering.

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