Published: Thu, September 20, 2018
Business | By Tara Barton

Danske Bank CEO resigns over money laundering scandal

Danske Bank CEO resigns over money laundering scandal

"It has been clear to me for some time that resigning would be the right thing to do", he said in a statement, "but I have held off the decision, because I have felt a responsibility for seeing the bank through this hard period towards presentation of the investigations".

Suspicious activity reports have been submitted to Estonian authorities, but Danske Bank cautions that such intelligence reports don't mean the customers or their transactions were laundering money or involved in crimes.

Shares in Danske fell more than 4% in Copenhagen following Mr Borgen's resignation and a lowering of its outlook for the full year.

Danske Chairman Ole Anderson has dropped hints that he could leave the bank, too, after the case ends. The CEO stepped down as a result of the year-long investigation.

While the report will help determine the outcome of current criminal probes in both Denmark and Estonia, Danish expert on money laundering Jakob Dedenroth Bernhoft says potential court cases and fines could come years into the future. Picture taken July 24, 2014.

While Danske says it wasn't able to provide an accurate estimate of the suspicious transactions through its Estonian branch, it says the non-resident portfolio included customers from Russia, Azerbeijan, Ukraine and other ex-Soviet states.

Of 15,000 accounts reviewed, Danske found roughly 6,200 had the "most risk factors" and it expected a "significant proportion" of these payments to be "suspicious". Borgen did not breach his legal obligations, the investigators found.

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The CEO of Denmark's largest bank has fallen on his sword over one of Europe's worst-ever money laundering scandals.

And earlier this year US authorities accused Latvia's ABLV of covering up money laundering, leading to the bank being denied USA dollar funding and its swift collapse.

When a whistleblower raised problems at the Estonian branch in early 2014, the allegations were not properly investigated and weren't shared with the board, Danske said. Accordingly, the Estonian branch did not employ Danske's anti-money laundering procedures.

While Danske does not have a banking license in the United States, banning USA correspondent banks from dealing with it would amount to shutting it out of the global financial network.

While it took measures to get its Estonian business under control in 2014, these were insufficient, the report said.

The government had to step in and ensure it could pay its short-term dollar debt when global markets froze in 2008 and in 2012 it was criticised for an advertising campaign that sought to improve its image, borrowing symbols linked to the anti-establishment movement Occupy Wall Street.

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