Danske Bank Will Give Up Estonian Money-Laundering Profits

Caught up in an embarrassing scandal tainting the Scandinavian image of being clean and transparent, Denmark’s Danske Bank said it would forego profits made on suspicious transactions in its Estonian branch from 2007-15 linked to money laundering.

Bank officials said that would be done once the scale of the problem becomes clear over its now-shut non-resident portfolio in Estonia, Reuters reported.

The breadth of the ongoing investigation is immense, said to cover more than nine million e-mails, 7,000 documents and millions of transactions over the nine years after earlier reports the problem was far worse than initially thought and may have resulted in more than $8.3 billion being laundered.

The bank suffered only a wrist slap from regulators who issued no penalties and only an advisory to hold more capital, Bloomberg reported at the time.

The bank’s board said it wanted to show it would not benefit financially and that its intention was to “make the gross income generated from such transactions … available for efforts that support the interest of the societies in which we operate, such as combating international financial crime.”

It said conclusions would be reported in September amid reports the bank could still face legal action despite deciding not to take profits from what amounts to partaking in criminal acts.

Danish Minister for Industry, Business and Financial Affairs Rasmus Jarlov told Reuters that, “The sin is not erased because they now acknowledge that they can't keep the money. Whatever legal options there might be for the Danish authorities, they will pursue them."

Danske Bank CEO Thomas Borgen said in May he was “very sorry” and that the bank is “in a very different place today” when it comes to fighting financial crime as inquiries into what may have happened there are ongoing.” 

Still, there were worrying signs the bank ignored what was happening in Estonia where the non-residents unit was showing returns of more than 400 percent and that there wasn’t an anti-money laundering chief for most of 2013.

A report from Denmark’s financial regulator revealed money flowing from Russia into the European Union via Baltic banks using UK-registered shell companies and a Danish whistleblower reported false data being submitted to Britain's corporate register, Companies House, one of the main centers of worldwide finance.