Danske Bank Under Fire Over AML Shortcomings
The FSA has reprimanded Sweden’s Danske Bank over ‘shortcomings’ in its anti-money laundering controls.
According to a Wednesday (Oct. 20) report from the Financial Times, Denmark-based Danske Bank is once again under regulatory scrutiny for lacklustre Anti-Money Laundering controls in place, following a money laundering scandal.
In a 7-page letter, Karin Lundberg, the FSA’s head of banking supervision, highlighted deficiencies in the Danske Bank’s AML protocols and stated it had not adequately measured how financial products and services could be exploited by fraudsters. Danske Bank has been given a deadline of June 22 for fixing the underlying issues, per the report.
Sweden’s Financial Supervisory Authority on Wednesday ordered the local subsidiary of Danske Bank to address significant deficiencies in its understanding of the financial-crime risks it faces by June 2022 to avoid an enforcement action: ($) https://t.co/LUHBalT58r pic.twitter.com/aJSas6Cz6S
— ACAMS ml.com (@ACAMS_ml_com) October 20, 2021
Prior to this, Danske Bank revealed that it was under investigation by regulators in the USA, Denmark, Estonia, and France over suspicious transactions that passed through the bank’s Estonian branch in December 2020. Following further fraud allegations, the stock prices of Danske Bank dropped by 4.2%.
According to the Financial Times, the bank is awaiting the outcome from U.S. regulators and criminal investigators, who can levy hefty fines and sanctions on former Danske executives for not complying with AML regulations.
AML regulations have been mandated by governments worldwide to curb money laundering and terrorism financing-related activities. Criminals typically exploit loopholes in banks’ AML controls to carry out illicit activities, making the bank subject to heavy fines and penalties on top of reputational damage.
Regarding the previous USD 235 billion money laundering scandal, Philip Richards, a senior bank analyst at Bloomberg Intelligence in London, said that “regulators are now all over Danske’s operations, checking everything, challenging everything.” The bank was also forced to pull back from overseas operations and other trading areas where the regulator deemed Danske to be taking too much risk.
Suggested Read: Danske Bank Facing the Long-term Cost of Money Laundering