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U.S. inquiry deepens Danske money-laundering crisis

Staff Writer |
Danske Bank faces a U.S. criminal investigation into a €200bn ($230bn) money laundering scandal at its Estonian branch which has rocked investor faith in Denmark’s biggest lender and forced its chief executive to quit.

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Shares in Danske Bank have lost a third of their value this year on fears of a U.S. inquiry because of the potential for significant penalties such as fines or being frozen out of dollar funding.

Danske Bank said it had “received requests for information from the U.S. Department of Justice (DoJ) in connection with a criminal investigation relating to the bank’s Estonian branch”.

The bank, which this week appointed Jesper Nielsen as interim CEO to handle the crisis in the short term after Thomas Borgen resigned last month, said on Thursday it was cooperating with the U.S. authorities.

Danish business minister Rasmus Jarlov has said Denmark wants to avoid a repeat of the case of ABLV in Latvia, where the bank was accused by U.S.

uthorities of covering up money laundering. ABLV was denied dollar funding and collapsed.

The mayor of Copenhagen, Frank Jensen, said the Danish capital was looking into ending its cooperation with Danske Bank as a result of the unfolding scandal.

Investors have fretted for months over the possibility of U.S. authorities investigating whether Danske Bank broke U.S. rules and at least one shareholder litigation company says it is looking closely to see whether it can bring a damages claim.

The DoJ, Denmark’s state prosecutor for financial crime (SOIK), the Financial Services Authority (FSA) and the central bank all declined to comment.

“We think a fine of $6bn, unlikely in our view given no sanctions/terror violations have been uncovered as yet after investigating high-risk customers, is already reflected in the price,” Jefferies analyst Kapilan Pillai said in a note.

France’s BNP Paribas reached a record $8.9bn settlement with U.S. authorities in 2015 to resolve claims that it violated sanctions against Sudan, Cuba and Iran.

Many of the non-resident accounts at Denmark’s Estonian branch were held by entities or individuals in Russia, which is the subject of U.S. sanctions.

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