Danske Bank head quits after giant money laundering scandal
The chief executive of Danske Bank today resigned after the publication of a damning report into the money laundering scandal which has rocked the lender.
Thomas Borgen said that it has been "clear to me for some time" that he would have to resign, after lax controls on money laundering in the bank's Estonian operations were revealed.
The Danish bank today published a report carried out by an independent law firm into the lender's non-resident portfolio in the Estonian branch which found thousands of suspicious accounts.
The bank is not yet able to say the total number of suspicious transactions, although it noted that it has reported "almost all" of 6,200 customers with red flags so far – out of a total of only 15,000 non-resident customers.
Some €200bn (£178bn) flowed through the suspicious accounts, including 9.5m payments in different currencies, foreign exchange lines and bond and securities trading.
Danske Bank, which issues sterling notes through its Northern Irish subsidiary, bought Estonia's Sampo Bank in 2007, ignoring warnings of potential money laundering of "billions of rubles" of Russian money laundering.
The report, from law firm Bruun and Hjejle, claims the board was completely unaware of the issues with the Estonian operations until a whistleblower revealed them in 2014. "All control functions (or lines of defence) had failed," the report noted.
The branch continued to operate independently from the main bank even after the acquisition, with the report finding a suspicion that employees "assisted or colluded with customers" to launder money.
"There is no doubt that the problems related to the Estonian branch were much bigger than anticipated when we initiated the investigations," said Ole Andersen, chairman of Danske's board. "The findings of the investigations point to some very unacceptable and unpleasant matters at our Estonian branch, and they also point to the fact that a number of controls at the Group level were inadequate in relation to Estonia."
He said: "The Bank has clearly failed to live up to its responsibility in this matter. This is disappointing and unacceptable."
The bank has donated 1.5bn Danish krone of earnings from the suspicious customers to an independent foundation to fight financial crime, and has fired employees and stripped bonus payments.
Some 42 employees and agents have been deemed to have been involved in some suspicious activity, while eight former employees have been reported to the Estonian police.