The Danish bank detailed compliance and control failings amid growing calls for a European Union crackdown on financial crime after a series of money laundering scandals that have attracted the attention of US authorities.
Borgen, who will stay on until a new CEO is appointed, told a press conference: “Even though I was personally cleared from a legal point of view, I hold the ultimate responsibility. There is no doubt that we as an organization have failed in this situation and did not live up to expectations.”
Borgen, 54, was in charge of Danske Bank’s international operations, including Estonia, between 2009 and 2012.
Despite the report shedding some light on the bank’s activities in Estonia, investors are concerned whether the United States, which has placed sanctions on Russia, will punish it.
Bill Browder, the founder and CEO of Hermitage Capital Management who has campaigned against corruption in Russia, stated to Reuters: “As this is the largest money laundering scandal in European history, and Danske Bank is a major bank that sends dollars around the world, I imagine that this will certainly get the attention of the U.S. authorities.”
Politicians in Denmark were highly critical of Danske Bank for not revealing exactly how much money was allegedly laundered and not saying who was legally responsible for the lapses.
“It is deeply embarrassing that for so many years there have been transactions that should not have taken place. Much of it is expected to be money laundering, and that is simply not good enough by Danske Bank,” business minister Rasmus Jarlov, who oversees Denmark’s banking sector, stated to a press conference.
Danske Bank said in its summary of a report covering around 15,000 customers and 9.5 mn payments between 2007 and 2015 that Borgen, Chairman Ole Andersen and the board “did not breach their legal obligations”.
Andersen stated that the bank had made an assessment of whether it violated US laws but declined to share its conclusion when pressed about it at the press conference.
The Estonian non-resident portfolio’s around 10,000 customers were registered in 90 different countries, with Russia, Britain, the British Virgin Islands and Finland the main ones, Danske Bank said, adding that around a third of them became clients of the branch in 2007.
Danske Bank, whose already battered shares fell by nearly 8%, said some 6,200 customers had been examined and it expected “a significant part of the payments to be suspicious”.
Shares in the bank had doubled in value from when Borgen took over in 2013 to July 2017, but have since lost more than a third as allegations of suspicious transactions increased and Denmark and Estonia began their criminal investigations.
The bank said it had taken action including “warnings, dismissals, loss of bonus payments and reporting to the authorities” against current and former staff, as well as overhauling systems that are found to have been failed.