Already cited for more than 200 billion euros ($235.39 billion) in money laundering scandal through its former Estonian branch called the biggest scandal in Europe, Danske Bank will face a new probe over compliance failures.
“We’re reopening the investigation of the bank that we initially closed in May,” Financial Services Authority (FSA head) Jesper Berg told Danish broadcaster TV2.
The scandal has rocked the Scandinavian country which had the best record for battling corruption in Transparency International’s annual ratings and led to Chief Executive Officer Thomas Borgen quitting,but no bankers are being prosecuted so far.
An investigation commissioned by the bank, Denmark’s largest, set off a firestorm of criticism and political fallout and led to calls for tougher European Union scrutiny of bank transactions between countries with most of the allegedly dirty money flowing from Russia.
Berg said the FSA would use the new information from Danske Bank’s report and focus on identifying a legal responsibility, the news agency Reuters said in a report, as the calamity has driven down the value of the bank’s shares and attracted the attention of EU officials with concern that U.S. sanctions against the former Estonian branch may have been violated.
European Justice Commissioner Vera Jourova said she will discuss the Danske Bank case with the finance ministers of Denmark, Finland and Estonia on Oct. 2.
“I want to understand better where the main errors happened, whether it was purely the fault of the lack of due diligence done by the bank itself or whether there were also some mistakes at the level of supervisory authorities,” she said.
The Brussels-based consultancy firm Deminor Recovery Service said it would ask at Danske Bank’s annual general meeting in March, 2019 for a separate impartial investigation of the case.
Danish Prime Minister Lars Lokke Rasmussensaid he was “shocked” at how much money was involved and said he wanted some answers from the bank.
“The fact that Denmark has been at the center of money laundering of this size is frankly quite horrible,” Rasmussen said outside a meeting of EU leaders in Salzburg, as the state prosecutor for financial crime has begun an investigation.
Denmark’s government said it would increase penalties for money laundering 800 percent in response to the debacle.“It’s a striking management failure,” Jeppe Kofod, head of the European Parliament’s special committee on financial crimes, tax evasion and tax avoidance, told Reuters.
“The responsible people should be fired to show that such a failure has consequences,” he said, stopping short at prosecutions and with no reports on whether any ousted executives, including Borgen would get big severance packages, so-called “Golden Parachutes” on leaving