Danske Bank Fined €1.82m Over AML and CTF Breaches

Danske Bank was accused of AML compliance failings and fined €1.82m by the Central Bank, revealing some major loopholes in the financial institution’s automated transaction monitoring system.

Danske Bank was fined €1.82m by the Central Bank for anti-money laundering laws breaches. The Irish branch of Danske Bank failed to ensure AML compliance in its automated transaction monitoring system. 

Danske Bank admitted the violation of the Criminal Justice Act 2010 and accepted their negligence towards three breaches. According to Seana Cunningham, director of Enforcement and Anti-Money Laundering of the Central Bank, nobody can overstate the importance of transaction monitoring to combat terrorist financing and money laundering concerns. 

“It is imperative that firms implement robust transaction monitoring controls which are appropriate to the money laundering risks present and the size, activities, and complexity of their business,” stated Ms. Cunningham. 

She added, “These controls must be applied to all customers, irrespective of their risk rating, as they enable firms to detect unusual transactions or patterns of transactions and where required apply enhanced customer due diligence to determine whether the transactions are suspicious.” 

The Central Bank instructed that when firms rely on automated monitoring solutions for money transactions, they must ensure efficiency and a systematic approach.

“In this case, the transaction monitoring system used by the Irish branch was a Danske group-wide automated system that had applied historic data filters which operated to erroneously exclude certain categories of customers from being monitored for a period of almost nine years. This led to the serious breaches in this case,” the Central Bank said.

The point of erroneous exclusion of customers’ certain categories from the automated transaction monitoring system came into Danske Banks’s knowledge in 2015. In 2018, the Irish branch identified the issues and completed the precautionary steps in March 2019 to cope with the matter. But as per the Central Bank’s stance, it was not informed of the problem until February 2019, which intensified the issue. 

“This case highlights the requirement for firms, including those operating in Ireland on a branch basis, to ensure that group systems, controls, policies and procedures are compatible with Irish legal requirements and to ensure that their governance framework and risk management measures operate effectively,” Ms. Cunningham added.

The Central Bank decided to impose a €2.6m fine, but Danske got a 30% reduction as the regulator provided an early settlement discount scheme. From 2014 onwards, the Irish branch of Danske Bank facilitated only corporate and institutional clients with banking services. The Central Bank said that it acknowledges the seriousness of the matter, which Danske Bank accepted. 

“Danske Bank deeply regrets and apologises for the matters which were the subject of this investigation,” it said.

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