Denmark’s government says Danske Bank is potentially facing a fine as big as 4 billion kroner, or about $630 million, if found guilty for its role in one of Europe’s biggest money laundering scandals.
Rasmus Jarlov, Denmark’s business minister and the man in charge of overseeing financial legislation in Danske’s home market, said the estimate is based on an assumption that the bank’s profits from transactions tainted by laundering amount to about 1.5 billion kroner. That’s what Danske says it earned at the Estonian unit at the center of the case, and what the bank has earmarked for “donation” to society.
The minister’s comments follow a series of stunning announcements by Denmark’s biggest bank on Wednesday, including the resignation of its chief executive officer, Thomas Borgen, and the admission that as much as $234 billion flowed through its tiny Estonian unit between 2007 and 2015.
Chairman Ole Andersen said that a “large” chunk of that amount may need to be treated as “suspicious.”
Speaking in an interview after Danske’s presentation, Jarlov only commented on a potential fine imposed by Danish authorities. Danske is the target of criminal investigations in Denmark and Estonia. U.S. authorities are reportedly also looking into the case.
“We’re aware that foreign authorities are monitoring Danish banks and could open cases,” Jarlov said. “But that just makes it even more important that we handle things thoroughly in Denmark, to make sure nobody elsewhere is left with the impression that we’re not coming down severely on this.”
Jeppe Kofod, who is a member of the European parliament, where he is a spokesman for the chamber’s committee on tax evasion and money laundering, said it’s clear the U.S. is looking at the Danske case.
“I was in the U.S. in July and spoke with the Treasury Department and there is no doubt that they also follow the Danske Bank case closely,” Kofod said in an interview. “This case is far from finished, it has just begun.”
The minister has already made clear he thinks the evidence suggests that “illegal acts” were committed in connection with Danske’s laundering case. Meanwhile, Danish lawmakers agreed to add 700% to the existing limit on fines for money laundering, though the new rule won’t be made retroactive.
The Danske scandal may become a watershed moment as Europe wakes up to the laundering risks festering in its own backyard. The Danish bank is just the latest big European financial firm to have its reputation marred by association with dirty money. Deutsche Bank AG and ING Groep NV have both paid hefty penalties for similar breaches.
According to Bill Browder, the founder and CEO of Hermitage Capital and the author of a criminal complaint against Danske, the revelations around the bank “put into question the entire anti-money-laundering system across Europe, from law enforcement to regulatory to the people in Danske Bank.”
Browder says the string of recent cases means there’s now “huge political pressure in the EU to grow some teeth” in terms of enforcing tougher rules and penalties. He also says the Danske case is likely to drag on for a very long time.
