The €200bn money laundering scandal that hit Denmark’s largest bank – Danske bank, has been described as the “the biggest scandal” in Europe by the European Commission.
An explanation from ministers from Denmark and Estonia would be sought by the European commissioner for justice about how the Danske Bank executives and regulators did were not able to detect the fraud, said Věra Jourová, the European commissioner for justice.
“I want to understand better where the main errors happened, whether it was purely a fault of the due diligence done by the bank itself or whether there was some mistake of the supervisory authority,” Jourová told reporters on Thursday.
“This is the biggest scandal, which we have now in Europe, which is also a very unpleasant lesson [showing] the need to be much more vigilant and [for] much more prudent checking [of banks’ activities]”, she added.
The incident was described as “frankly quite horrible” by Denmark’s prime minister who was shocked by the scale of the fraud. He pledged that Danske Bank and its executives would have to face the wrath of the Danish government.
An independent investigation report published on Thursday had revealed that about 15000 customers of the bank had been involved in the suspicious activities at the Estonia branch of the bank.
“The fact that Denmark has been at the centre of a money laundering of this size is frankly quite horrible,” Rasmussen told reporters at the European Union meeting in Salzburg. Despite the re3signationof the chief executive of the bank on Wednesday, Rasmussen said: “The case does not end with this.”
Investigations into the bank had been reopened by the Danish regulator financial regulator, the agency said. “We’re reopening the investigation of the bank that we initially closed in May,” Jesper Berg, the head of Denmark’s Financial Supervisory Authority (FSA) told the Danish broadcaster TV 2 on Thursday. “When new information comes to light, then we will always see if there is more to come. We have been following the case since May. But now the work we have in this matter intensifies.”
An eight-fold increase in the maximum fines for money laundering was passed earlier in the week by Danish politicians. The penalties are amongst the toughest in Europe. But the new law also stipulates that the new laws would not have any retrospective effect and hence the Danske Bank Estonian money laundering scandal would not come under its purview becaus eth incidents took place between 2007 and 2015.
A fine of Danske 4bn Danish kroner is expected to be imposed by Danish authorities, said Denmark’s business minister, Rasmus Jarlov. According to analysts, Danske will have to face fines in billions of dollars by Danish, European and US regulators.
“We’re aware that foreign authorities are monitoring Danish banks and could open cases. 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”, Jarlov said:.
So far this year, there has been a fall fo 28 per cent in the shares of Danske but the shares saw a rise of 4.5 per cent on Thursday following a buy call given by UBS.
(Adapted from TheGuardian.com)