According to the news report by Bloomberg, Danske Bank’s legal troubles are only getting worse. Danish prosecutors announced on Monday that they were opening a criminal probe into the bank. They stated that they were taking this step due to multiple complaints that Danske’s Estonian division had been used to launder billions of kroners of black money.
The prosecutors stated that this case had been followed very closely for some time because of its scope as well as seriousness, and that they would leave no stone unturned to solve it.
Danish prosecutors are not the only ones who are investigating Danske Bank. Estonian authorities also launched a similar investigation last week. This investigation was initiated after the Chief Executive Officer and co-founder of Hermitage Capital Bill Browder filed a criminal complaint against Danske in July.
Browder accused Danske of money laundering, gross negligence as well as list of other related misdeeds. He stated that Danske became the center for financial crimes between 2007 and 2015, during which time the bank helped funnel illicit funds coming in from Russia, Azerbaijan as well as Moldova to the rest of the European continent.
According to Browder, the amount of money the bank laundered totaled $8 billion, however, it could actually be closer to the $9 billion mark. The head of Hermitage also said that the starting point for this entire case was the $230 million that could be traced back to the death of Sergei Magnitsky, his lawyer.
When contacted for further details, the Danish authorities said that at this moment, it was just too early to assess whether there would be charges leveled against the bank. The spokesperson for the prosecution declined to say anything about possible targets or even timelines for this investigation.
The anti-money laundering laws in Denmark allow for financial penalties on suspicious transactions. Therefore, according to prosecutors Danske Bank could face financial penalties that could be significantly more than the company’s profits.
Last month, Bloomberg conducted a survey of 5 analysts to understand what kind of penalties Danske could possibly have to pay. The lowest amount guessed was $315 million, while the highest amount speculated was $4.7 billion. Two of the analysts actually feel that the bank may be able to completely avoid any kind of penalty.
Danske Bank’s share prices dropped by 0.5% in Copenhagen on Tuesday. With this drop, the bank’s stocks have fallen 25.5%. In fact, according to Jeffries analyst Kapilan Pillai and Barclays analyst Paulina Sokolova stated in notes to the clients recently that Danske’s stocks are now cheap in comparison to other enterprises in the industry.
With what has been happening to the bank, the Chief Executive Officer of Danske Thomas Borgen has had to apologize publically for not having acted sooner. The CEO stated that the bank’s board and he had discussed whether he should step down, however, all parties agreed that at this point in time, Danske needed an experienced hand at the helm.
Danske announced that it would be assisting the prosecuting authorities in this investigation. The General Counsel of the bank, Flemming Pristed issued a statement that Danske has an ongoing and positive dialog with the prosecutors and that they would be at the authorities’ service on all matters.
As part of the bank’s damage control, Danske agreed to pay a fine of $2 million in December 2017, after authorities charged the bank with breaking rules that required it to monitor transactions with other banks.
Danske also stated last month that it was donating the income from all suspicious transactions in its Estonian branch to support social development programs, especially financial crime fighting causes.