COPENHAGEN, Denmark: The chief executive of Denmark’s largest bank resigned Wednesday as an internal report into allegations of massive money laundering via its Estonian branch showed that “the vast majority” of transactions “have been found to be suspicious.”
Danske Bank commissioned the probe last year after reports of dirty money flowing through its Baltic subsidiary including from family members of Russian President Vladimir Putin.
The findings published show that some 200 billion euros ($235 billion) moved through its unit in Estonia.
“Overall, we expect a significant part of the payments to be suspicious,” the 87-page report said.
Thomas Borgen said in a statement that despite being cleared personally by the report “I think the right thing for all parties is that I resign.” He joined the Copenhagen-based bank in 1997 and became its CEO in September 2013
Danske Bank said the probe “has analyzed a total of some 6,200 customers found to have hit the most risk indicators. Of these, the vast majority have been found to be suspicious.”
It added that the fact that a customer has been found to have suspicious characteristics “does not mean that there is a basis for considering all payments in which the customer in question was involved to be suspicious.”
The investigation by a Danish law firm outlined “a series of major deficiencies in the bank*s governance and control systems.”
The first warnings came already in 2007, Ole Spiermann, the lawyer who headed the probe, told a news conference.
Kilvar Kessler, chairman of Estonia’s financial watchdog Finantsinspektsioon, said the audit “confirms the results of (its) supervisory proceedings” and “is clear evidence of the extent of the deficiencies that existed at the bank.”
In May, Danish regulators said there had been “serious shortcomings” in the anti-money laundering activities of Danske Bank in Estonia. Danske Bank was reprimanded and given eight orders to be fulfilled by June 30.
Denmark’s top prosecution authority eventually opened a criminal investigation to establish whether Danske Bank can be prosecuted before courts of law.
Estonia’s Baltic neighbor Latvia has been in the center of various banking scandals, including money laundering, for years after it became a hub for international banking, mainly from neighboring Russia and eastern European states like Ukraine. The issue caught the eye of U.S. authorities in particular, who have been worried that dirty money flows can help evade sanctions or finance terrorism.
Both Estonia and Latvia are members of the European Union and NATO as well as the eurozone.
Serving “non-resident” clients entails acting as a hub for deposits and payments to clients from a third country, mainly Russian ones in the case of Danske Bank’s Estonia branch. The practice has been common among Baltic banks.