$150B Money Laundering Probe of Danske Bank Implicates Citigroup and Deutsche Bank

U.S. law enforcement agencies have started their money laundering investigations of Danske Bank, Denmark’s largest bank, according to the Wall Street Journal. Citigroup and Deutsche Bank have been implicated. Danske Bank is also currently under investigation by Denmark and Estonia and its CEO reportedly ignored warnings of suspicious transactions.

$150 Billion Money Laundering Case

Danish and Estonian authorities have been investigating the bank and have shared information with their U.S. counterparts, several European officials familiar with the matter told the news outlet.

Why Is the US Interested?

The U.S. has yet to officially confirmed that it is investigating Danske Bank. Two weeks ago, Marshall Billingslea, U.S. Department of the Treasury’s Assistant Secretary for Terrorist Financing, told Danish daily Berlingske “We are following this case very closely.” Reuters elaborated:

The Wall Street Journal explained that the U.S. Treasury can restrict the supply of U.S. dollars to foreign banks and the Treasury and Justice Department can fine banks.

Adam Barrass, an analyst at Berenberg, noted back in July that the key risk to Danske Bank was “the potential U.S. fine because [of] Danske’s use of dollar funding and transactions,” the Financial Times reported.

CEO Ignores Money Laundering Signs

According to the Financial Times, Danske Bank’s CEO, Thomas Borgen, ignored calls to scale back business at the Estonian branch when warned of money laundering activities. The minutes seen by the news outlet reveals that the CEO was informed at a meeting in October 2013 that:

Instead, Borgen responded by emphasizing “the need for a middle ground, and wanted to discuss this further outside of this forum,” the publication noted.

The Wall Street Journal additionally detailed, “Estonian officials are investigating 26 former Danske employees, from low-level staff to the former branch CEO. They are accused of helping to launder $230 million in money from an alleged fraud committed in Russia.”

Deutsche Bank and Citigroup Implicated

Citing the person familiar with the probes, the Wall Street Journal also reported:

Deutsche Bank acted as a correspondent bank for Danske, handling dollar wire transfers while Citigroup’s Moscow office was involved in some of the transfers through Danske Bank’s Estonian branch, the person told the publication.

With the ongoing probes, the bank’s share price has been on a sharp decline this year.