Danske Bank set to shed light on Russian money flows to Europe

Denmark’s Largest Bank To Issue Report on Russia, Ex-Soviet Money Laundering

Denmark’s Largest Bank To Issue Report on Russia, Ex-Soviet Money Laundering

Danske Bank commissioned the probe a year ago after reports of dirty money flowing through its Baltic subsidiary, including from family members of Russian President Vladimir Putin.

Regulators and the financial community had eagerly awaited the Danske Bank report, which marks a critical milestone for the Danish lender and follows calls by Brussels for a new European Union watchdog to crack down on financial crime. Mr. Borgen will stay until a replacement.

"Even though the investigation conducted by the external law firm concludes that I have lived up to my legal obligations, I believe that it is best for all parties that I resign", Borgen said.

While the report will help determine the outcome of current criminal probes in both Denmark and Estonia, Danish expert on money laundering Jakob Dedenroth Bernhoft says potential court cases and fines could come years into the future.

Danske Bank, whose already battered shares fell by almost 8 percent during morning trading, said some 6,200 customers had been examined so far and it expected "a significant part of the payments to be suspicious".

Dutch bank ING this month admitted criminals had been able to launder money through its accounts and agreed to pay 775 million euros ($1.1 billion) to settle the case.

While Danske does not have a banking license in the United States, banning US correspondent banks from dealing with it would amount to shutting it out of the global financial network.

And earlier this year USA authorities accused Latvia's ABLV of covering up money laundering, leading to the bank being denied US dollar funding and its swift collapse.

Danske Bank said it would "donate the gross income from the customers in the period from 2007 to 2015, which is estimated at 1.5 billion kroner (201 million euros, $235 million), to an independent foundation which will be set up to support initiatives aimed at combating global financial crime, including money laundering, also in Denmark and Estonia".

The branch's handling of Russian and ex-Soviet money has also been the focus of an inquiry in Estonia itself.

And when a whistleblower raised problems at the Estonian branch in early 2014 the allegations were not properly investigated and were not shared with the board, Danske said, adding that measures to get its business there under control had been insufficient.

Danske Bank, which cut its forecast for annual net profit to 16-17 billion Danish crowns, from a previous 18-20 billion, has successfully overcome previous traumas.

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