Danske Says ‘Complex’ Laundering Probe Is Now Being Finalized

(Bloomberg) -- Danske Bank A/S said it is in the process of finalizing an internal investigation into allegations its Estonian operations were used to launder billions of dollars in illicit funds.

“The matter is very complex, and no conclusion as to the number of suspicious customers or transactions -- or indeed the extent of potential money laundering -- can be drawn from any individual pieces of information taken out of context,” the Copenhagen-based bank said late on Monday.

Danske said the comment was in response to an article published by the Financial Times, in which it is stated that as much as $30 billion flowed through the bank’s Estonian branch in a single year. The FT said it based its report on a draft by Promontory Financial that it says had been commissioned by Danske, and notes that the amount doesn’t necessarily reflect money that was laundered.

Shares in Danske opened about 5 percent lower in Copenhagen, their biggest decline since July 18. The head of equity trading at ABG Sundal Collier, Tue Oestergaard, said the market “is reacting to headlines, so it’s a negative start.”

But “we don’t know what the normal transaction volume is and there are really very few details here and many unknowns,” he said. “The transaction volume is high but it’s a relevant question to ask how high the regular volume is and you can’t just equate that with money laundering.”

Danske says it’s “not able to verify the specific information mentioned in the media.” The bank expects to publish the findings of its internal probe later this month, it said.

“I believe that it is in everybody’s interest that conclusions are drawn on the basis of verified and complete facts,” Danske Chairman Ole Andersen said in an email to Bloomberg. “The investigations are currently being finalized, and we look forward to sharing the conclusions.”

Aside from its own internal probe, Danske is the target of criminal investigations in Denmark and Estonia amid allegations that as much as $9 billion in illicit funds, mostly from Russia, was funneled through the bank’s Tallinn branch between 2007 and 2015. The story was first broken by the Berlingske newspaper, which focused on suspicious transactions at Danske’s Estonian unit.

In a note to clients, Morgan Stanley said Danske pointed to the need to “distinguish between gross flows, potentially suspicious flows and transactions with a clear illegal purpose.”

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