Investigations of Danske Bank’s branch in Estonia

In September 2017, Danske Bank launched thorough investigations into its branch in Estonia on the basis of suspicions that the branch was used to launder many billion kroner in the period from 2007 to 2015. On this site, you can read facts about the investigations, see frequently asked questions and get a timeline of events.

Once the investigations are completed in September, we will publish the conclusions and make them available on this site. If partial conclusions can be drawn before that, we will update the site accordingly.

Our responsibility

As a bank, we have an important responsibility for contributing to the combating of money laundering and other financial crime. We must know our customers and make sure that we detect and report suspicious transactions to the authorities. Every year, we allocate considerable resources to this work. Today, more than 1,000 employees at Danske Bank work in this area, and over the past year alone, we have sent almost 9,300 reports to the authorities regarding suspicious matters.

That is why we take the matter regarding possible money laundering at our branch in Estonia very seriously and wish to get the bottom of it and to understand how something like that could potentially take place.

The Executive Board and the Board of Directors of Danske Bank are of the clear view that the bank should not benefit financially from suspicious transactions that have taken place in the non-resident portfolio in its Estonian branch. Consequently, the bank intends to make the gross income from such transactions available to the benefit of society, for instance through supporting efforts to combat financial crime.

We take the issue very seriously. That is the reason why we have launched thorough and comprehensive investigations of the conditions in Estonia. We fully understand the extensive interest in the matter, and we are strongly committed to getting to the bottom of it and sharing our conclusions. I believe that it is in everybody’s interest that the investigations are as thorough and exhaustive as possible, since this is also what the severity of the case requires. For these reasons, it is important that we are patient and await the presentation of the findings in September. Should the investigations uncover misconduct on the part of employees or managers, we will of course ensure that the necessary steps are taken.

Ole Andersen

Chairman of the board of directors, Danske Bank

What we are investigating

In September 2017, in continuation of a so-called root cause analysis, we launched thorough and comprehensive investigations of Danske Bank Estonia. The investigations are overseen by Danske Bank’s Board of Directors and led by external law firms in cooperation with international experts.

This is a complex case, and the material examined is massive, consisting of documents, presentations, millions of emails and very large volumes of transaction data. That is why the investigations are taking time, but we expect to be able to present key findings at the latest in September 2018.

Generally, the investigations focus on two separate things: 

  • A thorough examination of customers and transactions at the Estonian branch in the period from 2007 to 2015. This examination will uncover the extent of suspicious transactions, and we will report any relevant matters that have not already been reported to the authorities. It will also determine whether there are employees who, actively or otherwise, contributed to such transactions.
  • An examination of who knew what and when, both in Estonia and at Group level, and to determine whether managers and employees lived up to their responsibilities to a sufficient degree.

The investigations are overseen by Danske Bank’s Board of Directors, and the Board receives regular updates. The law firm Bruun & Hjejle leads and supervises the investigations and will prepare the final report once the investigations have been completed. The investigation of all foreign customers and transactions at the Estonian branch from 2007 to 2015 is conducted by Danske Bank’s Compliance Incident Management Team, headed by Jens Madsen, former head of Denmark’s intelligence agency and the Fraud Squad (PET and SØIK). The investigations are also conducted in cooperation with Danish and international experts:

  • The international data analysis software company Palantir Technologies. This company provides a platform for analysing the original transaction and customer data.
  • The consultancy firms PwC and EY. They provide forensic experience.

Frequently asked questions

  • What is the case about?

    Until 2015, Danske Bank had a portfolio of non-resident customers in Estonia, that is, customers not living or doing business in Estonia. Having non-resident customers in your portfolio is not unusual, but the fact that many of them were resident in high-risk countries meant that the portfolio in Estonia was, by definition, high-risk in relation to money laundering. However, from the information that we received, also from the Estonian branch management, the Group’s management believed that the Group had strong controls and systems in place to address this risk. This turned out not to be true, as suggested in particular by a report from an internal whistleblower in December 2013. On the basis of this report, we launched a number of initiatives to reduce the risk and increase controls, and the portfolio was completely closed down in 2015. On the basis of the knowledge we have today, it is clear that we should have reacted faster and more forcefully than we did. For one thing, we should have looked into the activities that had taken place in the portfolio – such an investigation would probably have identified some of the cases that have since emerged. This investigation is ongoing.

  • Did Danske Bank launder money in Estonia - or participate in money laundering?

    We cannot draw any conclusions until the investigations have been completed, but unfortunately, there are indications that non-resident customers in Estonia took advantage of weaknesses in Danske Bank Estonia’s control setup and potentially used Danske Bank for money laundering purposes. Only the authorities can decide whether money laundering did in fact take place. Our responsibility is to know our customers and to detect and report suspicious transactions. As part of our investigations, we are also examining whether staff members were aware of or actively contributed to such transactions. If so, this is, of course, completely unacceptable and will be reported to the police.

  • Why does it take so long to conduct these investigations?

    The investigations in question are very thorough and comprehensive. They cover a period of nine years (2007-2015) and all customers and transactions in the non-resident portfolio at Danske Bank Estonia, so they are taking longer than we would have preferred. The process involves going through a very large number of transactions, documents and millions of emails. But we believe that it is important that we give the investigations the time needed to ensure that they are complete and that we get to the bottom of what went on in Estonia. A team of external law firms and international and Danish experts are working at full throttle to complete the investigations. We expect to be able to present the findings in September 2018.

  • How can an investigation launched by Danske Bank be trusted?

    The investigations are overseen by Danske Bank’s Board of Directors. The investigations are managed by external law firms in cooperation with leading international experts. Their mandate is to examine whatever is found relevant for the purpose of ensuring that we get to the bottom of this case. A large number of current and former staff members are being interviewed and millions of emails, documents and transactions are examined for the purpose of ensuring a basis that is as complete and factual as possible.

  • Why do new revelations keep popping up in the media – why do you not present all the facts?

    Even though they appear to be new revelations, the stories in the media all relate to the same portfolio of non-resident customers in Estonia. That portfolio was closed down in late 2015, and all customer transactions from 2007 to 2015 are now being examined. It is a complex case, so thorough investigations are needed, and we do not yet have the full overview. Our intention is to share as much information as possible with the public. But there are a number of details that we are not allowed to make public for legal reasons – such as the names of customers and what, if any, information we have reported to the authorities – and the course of events that took place over many years is complicated. It is important to us that the information we present is correct, so we have to await the outcome of the investigations.

    The investigations are thorough, involving the examination of very large volumes of material. That is why the investigations are taking longer than we would have preferred.

  • Why has the case not had any consequences for Danske Bank’s management?

    The case has already led to many changes. The management team in Estonia has been fully replaced, and an Executive Board member resigned from office in connection with the case. In addition, we have taken a number of managerial initiatives to strengthen our efforts to combat money laundering. Firstly, we have strengthened our controls and systems to prevent money laundering substantially. Secondly, we now provide far better training to our employees to allow them to combat money laundering across the Group. The ongoing investigations also look into the question of who knew what and whether any management members did not do what they should have done. That is the reason why the Board of Directors cannot make a decision on any management responsibility until the investigations have been completed.

  • Why did it take so long before you launched an investigation? You became aware already in December 2013 that something was wrong with the non-resident portfolio in Estonia.

    The whistleblower report of December 2013 triggered a number of investigations and initiatives aimed at reducing risks and increasing controls at the Estonian branch. The non-resident portfolio was closed down completely in the course of 2014 and 2015, and at the time, we focused mainly on doing just that. On the basis of the knowledge we have today about the extent of suspicious activities, it is clear than we should have acted faster and more forcefully. Among other things, we should back then have launched a thorough investigation into the activities in that portfolio.

  • What are you doing to avoid something similar happening again?

    Although we can never give guarantees, it has never been more difficult to use Danske Bank for money laundering than it is today. The situation is thus completely different today when it comes to the combating of money laundering and other financial crime. We allocate considerable resources to this and have in recent years quadrupled the number of employees – now numbering more than 1,000 – who are dedicated to this work. Each month, we screen almost four million customer transactions. About 15 million customer numbers are screened each week against international sanction lists, and we register some 150,000 warnings regarding unusual customer behaviour each year. Over the past year alone, we have sent almost 9,300 reports to the authorities regarding suspicious matters.

  • You say that you do not want to keep earnings on suspicious transactions in Estonia. What does that mean?
    That is a clear statement from the Board of Directors and the Executive Board to the effect that Danske Bank does not intend to benefit financially from suspicious transactions that have taken place in the non-resident portfolio at the Estonian branch. We are still investigating the exact extent of suspicious transactions in the now closed down portfolio in Estonia – and thus also the amount of earnings on those transactions. Once we have that overview, it is our intention to make the earnings on suspicious transactions in Estonia available for efforts that support the interest of society, such as combating financial crime. How specifically we will do that will be decided once we have the findings of the ongoing investigations, that is, in September at the latest.
  • How much money will you waive?
    It is not at present possible for us to say what the extent of suspicious transactions has been or how much money we have made on them. That, among other things, is what the current investigations will determine. We can say, however, that total gross income from the non-resident portfolio between 2007 and 2015 has been estimated at around DKK 1.5 billion. This compares to a reported total gross income for Danske Bank of approximately DKK 410 billion for the same period.

Timeline 

December 2013: An email from an internal whistleblower points, among other things, to a lack of controls and procedures at Danske Bank’s branch in Estonia. The contents and allegations in the email are investigated.

February 2014: Danske Bank’s Internal Audit initiates an audit on the basis of the email from the whistleblower and hires KPMG to conduct further investigations.

March/April 2014: On the basis of the audit and the investigation conducted by Internal Audit and KPMG, Danske Bank concludes that the control environment has been inadequate. All onboarding of new customers ceases.

2014-2015: The non-resident portfolio in Estonia is closed down.

March 2017: Several media run articles about Russian money laundering, and Danske Bank decides to conduct a root cause analysis of the suspicious transactions in the now closed-down non-resident portfolio. The analysis concludes that the lack of control is due to inadequate focus on the combating of money laundering in Estonia, a lack of focus on governance in relation to compliance and risk, and management follow-up being highly dependent on local country management. The analysis is conducted by the Promontory Financial Group consultancy firm.

September-November 2017: The investigations are expanded to include two separate things: A thorough investigation into customers and transactions in Estonia in the period from 2007 to 2015, including whether employees have, actively or otherwise, contributed to suspicious transactions; and an investigation into who knew what and when, both in Estonia and at Group level. Both investigations are overseen by the Board of Directors and led and supervised by external law firms in cooperation with international experts.

April 2018: Lars Mørch, Member of the Executive Board, resigns from his position. The investigation into matters relating to the Estonian non-resident portfolio has not been completed, but it is clear that Danske Bank should have launched more thorough investigations at an earlier time than we did, as this would have provided an understanding of the extent of the problems, in turn leading to swifter action.

May 2018: The Danish Financial Supervisory Authority announces its decision in the case.

September 2018: The findings of Danske Bank’s own, externally led, investigations are presented.

Comments on recent media cases

Berlingske Tidende – Tuesday, 3 July (in Danish only)

“As we have said earlier, it is too soon to draw any conclusions about the extent of potential money laundering in Estonia. That is the reason why we have not ourselves published figures or commented on speculations about potential amounts. On several occasions, however, we have said that the extent seems to be somewhat larger than previously estimated. Until the investigations launched have been completed in September, though, it would be wrong to speculate any further. But there is no doubt that even one krone laundered is one too many, and that we take this matter very seriously. We cannot comment on specific businesses, but all customers in the Estonian portfolio, which was closed down several years ago, are investigated. And we report findings to the authorities on an ongoing basis to the extent that this has not already been done.”

- Anders Meinert Jørgensen, Head of Group Compliance at Danske Bank

DR/Berlingske Tidende – Sunday, 24 June 2018 (in Danish only)

“With the knowledge we have today, it is clear that we had customers at the Estonian branch that we never should have had and that there were transactions that should never have been carried out. I am not at liberty to comment on specific customers and transactions or say what we have reported to the authorities. But I can say that generally when we become aware of suspicious matters, we are obliged to report them to the authorities. The case in question is not new to us, and has, in fact, been mentioned in the media earlier. We thus assessed the matter at the time.”

- Thomas F. Borgen, CEO of Danske Bank