Danske Bank Prepares to Pay $2B in Money-laundering Fines

Published: 28 October 2022

Danske Bank Copenhagen

Danske Bank’s headquarters in Copenhagen. (Photo: RL0919, Wikimedia, License)

By Josef Skrdlik

Danske Bank announced on Thursday that it had booked an additional provision of around US$1.8 billion designated for fines that could bring one of the world’s biggest money-laundering scandals closer to a settlement.

In 2018, a report commissioned by Danske Bank concluded that of the US$200 billion that flowed through its Estonian branch from 2007 and 2015, a major portion was of suspicious origin.

Most of these payments were coming from the former Soviet Union, with shell companies being used to conceal identities of those involved.

“The discussions with U.S. and Danish authorities related to the Estonia matter are now at a stage where Danske Bank can reliably estimate the total financial impact of a potential coordinated resolution,” Danske Bank’s CEO Carsten Egeriis said.

Following the revelation in 2018, Danske Bank booked the provision of US$200 million, to which it now added around $1.8 billion.

That said, the settlement is not guaranteed yet.

“Our dialogue with the authorities is ongoing, and while there is still uncertainty that a resolution will be reached, we hope that a resolution will be concluded before the end of this year,” added Egeriis.

The Estonia scandal was triggered by Howard Wilkinson, a former trader at the Estonian branch, who had informed the executive board in Copenhagen about suspicious activities taking place in the office.

A later investigation by Estonian authorities, released last year, detailed how bankers in the foreign banking division of the branch helped their clients to launder illegal proceeds in exchange for fees and commissions.

The group of 19 individuals offered services ranging from selling offshore companies and making fake contracts to finding proxy directors who were then added to company paperwork.

The investigators suggested that the money originated in eight schemes in Russia, Azerbaijan, Iran, Switzerland, Georgia and the United States.

Following the Thursday announcement, the bank’s shares rose by 12% but remain at less than half of the value before the Estonia money-laundering was revealed.