Danske Bank Under Fire Over AML Shortcomings

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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