The Danske Bank finance centre in Copenhagen, Denmark, on Tuesday, September 18 2018. Picture: FREYA INGRID MORALES/BLOOMBERG
The Danske Bank finance centre in Copenhagen, Denmark, on Tuesday, September 18 2018. Picture: FREYA INGRID MORALES/BLOOMBERG

Copenhagen — Danske Bank faces a new Danish investigation into alleged money laundering a day after revealing payments totaling €200bn through its Estonian branch, many of which were suspicious.

Thomas Borgen, Danske Bank's CEO resigned on Wednesday after an investigation it had commissioned exposed failings in controls and compliance.

The bank's report prompted widespread political criticism and has persuaded Denmark's Financial Services Authority (FSA) to revisit a case it had put on ice earlier this year, but is reported to have attracted the attention of US authorities. "We're re-opening the investigation of the bank that we initially closed in May," FSA head Jesper Berg told Danish broadcaster TV2 on Thursday.

While authorities in the US have yet to say whether they are investigating the payments, many of which came from Russia and other former Soviet states, Danske Bank's case will be high on the agenda of EU states.

European justice commissioner Vera Jourova said on Thursday that she will discuss the Danske Bank case with the finance ministers of Denmark, Finland and Estonia on October 2. "I want to better understand 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 told a news conference in Brussels that she will also discuss the case with the European Banking Authority to see if mistakes were made at the supervisory level.

‘Striking failure’

Danish Prime Minister Lars Løkke Rasmussen voiced his concern over the failings exposed by the country's biggest lender, saying he was "shocked" at the scope of the suspicious payments and pushed the bank for more answers.

"The fact that Denmark has been at the centre of money laundering of this size is frankly quite horrible," Rasmussen told reporters outside a meeting of EU leaders in Salzburg late on Wednesday. Danske Bank already faces a criminal investigation after the Danish state prosecutor for financial crime said in August it had started its own inquiry. "The case doesn't end with this," the prime minister said, referring to Wednesday's report from Danske Bank.

Politicians, who are scrambling to show they take the problem seriously, agreed on a new anti-money laundering law this week that will include an eight-fold increase in the size of fines, making it one of the toughest in Europe.

"It's a striking management failure," Jeppe Kofod, who chairs 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." Danske Bank said on Wednesday that it had taken action against former and current staff.

In Denmark, which regularly features in surveys as one of the least corrupt countries in the world, politicians are critical of Danske Bank for not revealing exactly how much money was laundered and not placing any legal responsibility. 

Business minister Rasmus Jarlov told Reuters on Wednesday that Denmark wanted to avoid a scenario like the one in Latvia where ABLV was accused by US authorities of covering up money laundering, leading to the bank being denied dollar funding and its swift collapse.

"We're dealing with it here, and we crack down hard on money laundering, and we hope this is being noticed abroad," he said. Both Jarlov and Danske Bank's board chair Ole Andersen have said they are not allowed to say whether they have been in contact with US authorities regarding the case.