Danske faces US criminal investigation over €200bn scandal

Alleged money laundering at Estonian branch could lead to billion-dollar fine

Danske Bank is facing a criminal investigation by US federal prosecutors into its €200 billion money laundering scandal, raising the possibility of a large fine for Denmark's biggest lender.

Danske disclosed on Thursday that it had received requests for information from the US Department of Justice. But it said the timing and outcome of the probe into alleged money laundering through its small Estonian branch was unknown.

"We are co-operating with the authorities investigating us as a result of the case. However, it is too early to speculate on any outcome of the investigations," said Jesper Nielsen, Danske's interim chief executive. Danske ousted its previous chief executive, Thomas Borgen, on Monday following disclosures he ignored warnings about the Estonian branch.

Last week, the Republic’s procurement office said it was monitoring the scandal at Danske Bank, months after the Danish group was picked to provide day-to-day banking services to the Government.


The Danish government has said it is doing everything to avoid Danske suffering the same fate as ABLV, a Latvian lender that was forced to liquidate itself earlier this year after US authorities ordered banks to stop clearing dollars on its behalf.

Analysts predict Danske could face billions of dollars in fines over the scandal.

Shares in Danske fell 2 per cent to DKr162.50 (€21.79) after the investigation was disclosed on Thursday morning, bringing their decline in the past seven months to 34 per cent.

Investigations under way

Danske’s growing scandal has already cost Mr Borgen his job after the bank outlined how €200 billion in money from Russia and other former Soviet states had passed through its Estonian branch between 2007 and 2015. Investigations are under way in at least six countries, with criminal probes in Denmark and Estonia as well as the US.

Analysts at Berenberg noted that Danske had downplayed the risks of a US fine last month as it has no US banking or dollar clearing licence and no access to the Federal Reserve’s liquidity window.

However, about 15 per cent of its funding is in dollars, according to Berenberg, which added: “Danske will likely remain under pressure, as money laundering investigations are not complete, and regulatory fine risk continues.” – Copyright The Financial Times Limited 2018