Danske Bank, Denmark’s leading financial services group, is under investigation by Danish authorities for multiple cases of money laundering through its Talinn-based branch, Danske Bank Estonia (DBE), between 2007 to 2015.
More significantly, the investigation being headed by Denmark’s Financial Supervistory Authority (FSA) will examine reports that money laundered through DBE was used to finance weapons deals between North Korea and Iran in 2009.
Initial investigations by regulatory authorities in Denmark and in Estonia suggest that upwards of $7 billion, much of it originating from Russia and Moldova, may have been laundered through DBE over a 10-year period.
“There can be no doubt that what is being investigated in Estonia falls under the management responsibility of Danske Bank,” said Lars Rohde, the Governor of Nationalbank, Denmark’s central bank.
According to Rohde, U.S. authorities may become involved in the investigation if it is revealed that money laundered through DBE were used for arms deals and by criminal organizations to finance terrorism in Europe, North America or the Middle East.
“In the worst-case scenario, Danske Bank could be facing financial penalties imposed by the United States,” said Rohde.
Danske Bank’s CEO, Thomas Borgen, is coming under increasing pressure to explain how DBE could have been used as a money laundering “station,” either as suspected by investigators to move Russian state funding abroad, or by Russian criminal organizations to finance arms deals.
Borgen was head of Danske Bank’s international operations in 2009-2012. This role had full oversight on the bank’s Baltic banking activities, including Estonia.
Danish investigators are examining end-uses for money laundered through DBE. One such inquiry includes the shipment by aircraft of 35 tons of missiles, grenades and other military materials between North Korea and Iran in December 2009.
Danish investigators suspect the deal was funded from cash laundered through DBE by Russian state officials, working with organized crime groups.
The Danish FSA are being helped in their investigation by American businessman William Browder, a founding director in Hermitage Capital Management. The investment fund and asset management company that specialized in Russian markets since the 1990s.
Browder, the man behind the passage of a series of sanctions known as the “Magnitsky Act” in the U.S., plans to file a criminal complaint against Danske Bank.
“There needs to be a thorough investigation as to where the monies that left Russia came from, how they were laundered in Estonia, and what the money was used for after this point,” said Browder.
Browder intends to lodge his criminal complaint against Danske Bank with the Danish Public Prosecutor for Special Economic and International Crime (PPS-EIE).
The Danish government, conscious that the moneylaundering scandal around Danske Bank could hurt the country’s international image, says it supports a full and transparent investigation.
“We are fully aware that money laundering by a financial company, such as a bank, can have very significant adverse effects on Danish society. We are monitoring the ongoing investigations, and specific case around Danske Bank, very closely. We are in contact with authorities and international organizations in several countries,” said Morten Niels Jakobsen, the PPS-EIE’s chief prosecutor.