Bank Executives Targeted in Danish Crackdown on Offshore Units
Bank Executives Targeted in Danish Crackdown on Offshore Units
(Bloomberg) -- Denmark’s government wants to introduce stricter laws to target bank executives and make sure top management can be held accountable for misdeeds conducted anywhere in an organization, including all its international units.
The initiative follows allegations that Danske Bank A/S, the biggest Danish lender, became a hub for money launderers who may have funneled more than $9 billion through its Estonian branch between 2007 and 2015. The Copenhagen-based bank, which is now the target of criminal investigations in Estonia and Denmark, has said it is cooperating fully with the relevant authorities to get to the bottom of the case. Chief Executive Officer Thomas Borgen has publicly apologized for not acting sooner to stop the laundering.
Danish Business Minister Rasmus Jarlov says part “of the frustration has been over how difficult it is to hold management directly responsible for what happened in the branch.” He says that, following the lessons learned from the Danske Bank case, “that’s one of the things we’re tightening.”
Jarlov, who joined the center-right cabinet of Prime Minister Lars Lokke Rasmussen in June, says any new laws wouldn’t carry retroactive powers and therefore wouldn’t be applied to the Danske case.
Denmark was lambasted last year for its inadequate money laundering defenses. A report by the Financial Action Task Force -- an inter-government organization that monitors compliance with global regulations -- found extensive shortcomings, including no coordinated plans and insufficient resources, as well as a “weak” implementation of anti-laundering measures by banks.
The Danish government is now trying to improve its toolbox for fighting financial crime, within the framework of goals set by the European Union. Jarlov says Denmark has “considerable latitude” to define national standards when it comes to matters such as the size of fines. The measures his ministry is putting together would make Danish anti-money laundering regulation “one of the toughest in Europe,” he said.
Some Examples of What Jarlov Wants to Do:* Deny bank executives permits to run a financial institution if they have failed to prevent money laundering in units, at home or abroad, that fall under their oversight* Apply so-called fit and proper rules to lower-level executives and make banks accountable for criminal behavior by junior executives or other lower-ranking employees |
Meanwhile, bills targeting money laundering and other forms of financial crime have stalled as Danish lawmakers take stock of the Danske scandal and revise their initial proposals.
The government on Thursday presented its budget proposal for next year, allocating an extra 15 million kroner ($2.3 million) to fight money laundering and to step up surveillance at the Business Ministry, the Economic Crimes Prosecutor and the Financial Supervisory Authority.
Jarlov says more resources wouldn’t have helped the authorities detect wrong-doing sooner at Danske Bank. The main issue, he said, “was perhaps that too much trust was placed in the information Danske Bank gave.”
Banks Are Making Too Many Loans to Weak Clients, Danish FSA Says
Danske Bank is due to publish the findings of an internal probe into the laundering allegations this month.
To contact the reporters on this story: Peter Levring in Copenhagen at plevring1@bloomberg.net;Frances Schwartzkopff in Copenhagen at fschwartzko1@bloomberg.net
To contact the editors responsible for this story: Tasneem Hanfi Brögger at tbrogger@bloomberg.net;Christian Wienberg at cwienberg@bloomberg.net
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