EU Probes Regulator Oversight On Danske Money Laundering Scandal

Danske-Bank

The European Union’s (EU’s) banking supervisor wants to know more about how Denmark’s financial watchdog supervised Danske Bank, which is being investigated by the U.S. Department of Justice (DOJ) over alleged money laundering.

“We are doing preliminary breach of union law inquiries on … the Danske Bank case in Denmark,” said European Banking Authority (EBA) Chair Andrea Enria told the European Parliament, according to Reuters.

The EBA can make recommendations that national supervisors must follow. In addition, Enria told Parliament that the EBA is looking into how all EU member states apply anti-money laundering (AML) rules, and will hand in its report by the end of the year.

Last month, it was revealed that U.S. law enforcement agencies are examining Danske Bank, Denmark’s biggest bank, over what has been termed “massive money laundering flows” from Russia and several former Soviet states. The agencies probing the alleged incident include the Securities and Exchange Commission (SEC), the Department of the Treasury and the DOJ. The probes are ongoing, and relate to transactions tied to the bank’s Estonian branch and focus on $150 million of money that made its way through accounts of non-Estonian holders.

Shortly after the investigation hit the news, the Danish Financial Supervisory Authority (DFSA) announced that it had reopened an inquiry into the money laundering scandal. In May, it reprimanded the bank and told it to set aside $800 million in capital to cover any potential risks from the scandal. However, the DFSA doesn’t have the authority to actually impose fines on the bank.

As a result of the scandal, Danske’s Chief Executive Thomas Borgen stepped down, saying that it “is clear that Danske Bank has failed to live up to its responsibility in the case of possible money laundering in Estonia.” While the executive said the investigations didn’t find that he breached his legal obligations, he still made the decision to leave his position.