Danske Bank scandal needs full accountability, not scapegoating

Issued by Transparency International Secretariat

Updated at 18:40 on 20 February 2019



Transparency International welcomes the European Banking Authority’s decision to investigate the Danish and Estonian financial supervisory authorities concerning their work over Danske Bank. Responding to a request from the European Commission, the regulator announced yesterday it will seek to determine if the two have breached European Union law by failing to act upon the apparent money laundering through the Bank’s accounts.

“We expect for this investigation to confirm that both financial supervisors have failed to protect the European Union and, by extension, our interconnected world, from dirty money,” said Maíra Martini, Knowledge Coordinator at Transparency International. “The European Union will need to identify all at fault in order to learn from this bitter lesson.”

Following the decision, the Estonian financial supervisor promptly ordered Danske Bank to close its notorious Tallinn branch, stating that the scandal was “the greatest blow to the transparency, trust and reputation of the Estonian financial market.”

While both Estonia and Denmark received good marks on the Corruption Perceptions Index 2018, Transparency International highlighted how countries with the cleanest public sectors have been enabling grand corruption around the world. These two countries, in particular, have become easy targets of individuals and companies behind the illicit US$230 billion funneled through Danske Bank.

In 2014, well before courageous whistleblowers and investigative journalists unveiled the Danske Bank scandal, the Estonian financial regulator had a crucial opportunity to act when their inspections identified the branch’s failure to comply with anti-money laundering rules.

“The response of Estonia’s financial supervisory authority suggests that they do not accept responsibility for supervising banks operating in their territory,” Maíra Martini argued. "Shutting the branch down years later does not absolve them of the responsibility to investigate and stop billions in dirty money from flowing freely through its accounts. They should investigate and cooperate with the authorities to identify companies and individuals behind the money.”

Denmark’s financial supervisory authorities responded with a statement expressing disappointment that their Estonian counterparts were distancing themselves from a shared responsibility. However, it’s important to emphasise that Danish authorities have a responsibility to ensure all branches of Danish banks meet anti-money laundering standards, and that investigations continue into the failings in this particular case.

The scapegoating and the back-and-forth between the two authorities demonstrates the need for stronger EU-wide anti-money laundering supervision.

 

Background

The Tallinn branch of Danske Bank is at the centre of Europe’s biggest money-laundering scandals. Between 2007 and 2015, around US$230 billion, including US$2.9 billion associated with Azerbaijan’s ruling elite, of illegal money was laundered through the branch.

In September 2018, the internal investigation of Danske Bank found that its Estonian branch was “misused for suspicious transactions” and that the Bank “reacted too late and too slowly.” These findings prompted its CEO’s resignation.

Last year, Estonian and Danish prosecutors launched criminal investigations. In November, Danske Bank was preliminarily charged with breaking Denmark’s anti-money laundering laws. Investigations in Estonia have so far resulted into arrests of branch's ten employees.

 


For any press enquiries please contact

E: press@transparency.org
T: +49 30 34 38 20 666

Latest

Support Transparency International

Asylum for Sale: Refugees say some U.N. workers demand bribes for resettlement

A 7-month investigation found reports of UN staff members exploiting refugees desperate for a safe home in a new country. By Journalists for Transparency reporter Sally Hayden.

Four ways the G20 can take the lead on anti-corruption

The globalisation of world trade and finance has been accompanied by an internationalisation of corruption. The G20 Anti-Corruption Working Group therefore has the potential to be a very important partner in the fight for a more just world.

Venezuela: Se necesitan instituciones sólidas para abordar la delincuencia organizada

La corrupción en las más altas esferas del Gobierno venezolano ha causado inestabilidad social y económica extrema y ha debilitado a las instituciones estatales que deberían proteger a la ciudadanía. Las redes de delincuencia organizada actúan con impunidad en todo el país.

Venezuela: Strong institutions needed to address organised crime

Corruption in the top echelons of the Venezuelan government has led to extreme instability and weak state institutions, and allows organised crime networks to act with impunity all across the country.

The trillion dollar question: the IMF and anti-corruption one year on

The International Monetary Fund (IMF) has made public commitments and adopted a new framework to address corruption - we check how the IMF is progressing with this one year later.

Three years after the Panama Papers: progress on horizon

The explosive Pulitzer Prize-winning global media project known as the "Panama Papers" turned three years old, and there are many reasons to celebrate.

Call for papers: the Global Asset Registry workshop – Paris, July 1-2

ICRICT, the World Inequality Lab project, Tax Justice Network, and Transparency International are co-hosting a workshop to develop the framework for a Global Asset Registry in Paris on July 1-2. The organisers wish to invite original, high-quality papers for presentation.

Troika Laundromat signals a different kind of financial crisis

The Troika Laundromat investigation shines a spotlight on a cast of new and familiar characters in the ongoing saga surrounding flows of dirty money through the world’s financial system.

Social Media

Follow us on Social Media