Danske Bank CEO resigns; Visa, Mastercard offer to settle with retailers

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Danske Bank chief resigns
Thomas Borgen, the CEO of Danske Bank, resigned Wednesday after the bank found more than $200 billion in transactions ran through its tiny Estonian branch. The bank, the largest in Denmark, said it suspects a "large portion" of it was related to money laundering, most of its from Russian clients. Borgen, however, said he didn't do anything wrong legally and intends to stay until a replacement is named.

"It is clear that Danske Bank has failed to live up to its responsibility in the case of possible money laundering in Estonia," Borgen said. "I deeply regret this. Even though the investigation conducted by the external law firm concludes that I have lived up to my legal obligations, I believe that it is best for all parties that I resign."

An earlier story in the Wall Street Journal said Danske Bank knew almost two years earlier than previously indicated that its Estonian branch was being used by blacklisted Russian clients but did little about it. The bank is being investigated by U.S. and European authorities.

The Financial Times looks at "why EU banks have become a money launderer's dream."

Receiving Wide Coverage ...

It still ain't over yet
Visa, Mastercard and several large banks have agreed to pay $6.2 billion to settle an antitrust lawsuit with retailers over the swipe fees merchants pay to accept credit and debit card payments.

Still, if the settlement is approved by a court, the retailer plaintiffs will have the option to opt out as a case on card network rules is still ongoing. "It is highly likely that the large merchants who are involved in litigation with the card networks will opt out of the settlement," said Jeffrey Shinder, the lead lawyer for the retailers. "This case is fundamentally about structural issues, and not just money."

Fixes needed
A new report from the New York attorney general's office says several cryptocurrency exchanges "lack basic consumer protections and are vulnerable to exploitation by market manipulators." Attorney General Barbara Underwood said in a statement that many "virtual currency platforms lack the necessary policies and procedures to ensure the fairness, integrity, and security of their exchanges."

A recent decision in Federal District Court in Brooklyn may be a first step in putting an end to the idea that initial coin offerings are exempt from federal securities laws. "Initial coin offerings have raised billions of dollars over the past few years, and that much money is sure to draw the attention of the SEC and the Justice Department because of the potential for scams," the Times' White Collar Watch column says. "Any slice of the investment universe that claims not to be subject to regulation is unlikely to stay that way for long before the government demands that the players follow the same rules that apply to everyone else trying to raise money from the public."

The Financial Action Task Force said it is close to creating an international set of standards to fight money laundering done through digital currencies.

Wall Street Journal

Under pressure
Facebook pressured financial firms as recently as last year to allow it to use customer data from its Messenger platform for advertising and other purposes. "Concerned about privacy," however, "several firms negotiated bespoke agreements that limited how Facebook could use any financial information that would pass through its servers."

"The negotiations highlight a dilemma facing Facebook as it balances its need for detailed user data to better target advertisements and increase user engagement with concerns about how best to handle users' most sensitive personal information."

Nice deal
The Federal Reserve Bank of New York said it made a $2.5 billion profit for taxpayers after selling off the remaining holdings of its Maiden Lane LLC securities facility, which included troubled assets from Bear Stearns. The New York Fed took on the assets in order to get JPMorgan Chase to buy the failing Wall Street firm during the financial crisis. The profit included $765 million in interest income and the rest from the proceeds of the sale.

Here are five things you need to know about Mary Daly, the new president of the Federal Reserve Bank of San Francisco, who will have a vote on the Fed's monetary policy committee, which meets next week.

Financial Times

Risk transfer?
The FT looks at "how the biggest private equity firms became the new banks." "Ten years after the crisis, the rapid expansion in private credit raises the question of whether risks have simply been transferred to a different, less regulated part of the market."


"Capping awards would all but ensure that the elephant never walks through the [SEC's] doors, only rabbits and the occasional zebra." — Harry Markopolos, a financial fraud investigator who exposed the Bernie Madoff Ponzi scheme, about a proposal by the Securities and Exchange Commission to limit the size of whistleblower awards.

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Money laundering Interchange fees Cryptocurrencies Data privacy Federal Reserve Bank of New York Federal Reserve Bank of San Francisco Facebook