Danish financial authority failed to use strongest measures against banks: report

Banking regulator Finanstilsynet has failed to use the full extent of its powers to control lenders, media in Denmark reported on Thursday.

Danish financial authority failed to use strongest measures against banks: report
File photo: Carl Redhead/Ritzau Scanpix

The Danish Financial Supervisory Authority (Finanstilsynet) has been reticent to intervene with bank leaderships in relation to recommendations provided in international guidelines, Jyllands-Posten reports.

A previously unseen note sent by the agency to parliament last year shows a lack of full application of ‘fit-and-proper’ rules relating to bank leaderships, the newspaper writes.

Fit and proper guidelines are designed to help authorities to assess whether a person is considered to be suitable to take charge of a bank.

Money laundering expert Jakob Dedenroth Bernhoft told Jyllands-Posten that he expects Finanstilsynet to follow operations at banks more closely in the light of recent scandals such as the suspected whitewashing of vast sums of money at Danske Bank’s Estonian branch.

“If they had done this at Danske Bank, the authority would have known about the money laundering problems a lot earlier and there would have been opportunity for a friendly discussion with the bank’s leadership – which is what should have been done,” Bernhoft told the newspaper.

MPs have expressed concern over the apparently lenient approach of the Danish watchdog.

Hans Kristian Skibby, businesses spokesperson with the Danish People’s Party, said it was “highly regrettable” that more stringent action had not been taken by Finanstilsynet.

Social Democrat MP Morten Bødskov, who chairs the parliamentary businesses committee, has called Business Minister Rasmus Jarlov to consultation. Bødskov wants to know whether Finanstilsynet will face consequences over the issue.

“This gives the government a problem to explain,” Bødskov said to Jyllands-Posten.

“The key question is: who decided that laws passed by parliament should not be applied to their full extent?”, he added.

READ ALSO: Danske Bank value plummets in midst of money laundering scandal


Danish police drop money laundering case against Danske Bank directors

Denmark’s economic crime unit SØIK has dropped potential charges for money laundering against three leading former directors of Danske Bank, Denmark’s largest bank, but investigation of the bank itself continues.

Danish police drop money laundering case against Danske Bank directors
File photo: Jacob Gronholt-Pedersen/Reuters/Ritzau Scanpix

The three directors, Thomas Borgen, Henrik Ramlau-Hansen and Lars Stensgaard Mørch were investigated in relation to a scandal involving large-scale money laundering at the Estonian division of the bank.

Each of the three confirmed to newspaper Børsen that charges have been dropped.

In a written statement to media, SØIK said it had not uncovered “evidence that any individual has shown negligence to such an extent that it can be characterised as gross” and that the law had therefore not been broken.

“For an individual to be convicted under money laundering laws, they must have committed gross negligence. In this case we have conducted a vert comprehensive and thorough investigation with a number of investigative steps,” acting head of SØIK Per Flig also said in the statement.

The bank itself is still under investigation for possible breach of money laundering laws, however, Flig noted.

READ ALSO: US files lawsuit against scandal-hit Danske Bank

No individuals now remain under suspicion in the investigation, meaning SØIK has dropped cases against all leading bank executive who were suspected by police in March 2019.

Around 1,500 billion kroner from foreign customers flowed through the Estonian division of Danske Bank between 2007 and 2015, an investigation found.

A large proportion of that money is considered to be suspicious. The scandal resulted in Borgen’s resignation as CEO and the bank closed its Estonian branch in 2019.

READ ALSO: More on the Danske Bank money laundering scandal