Also Tuesday, Danish lender Danske Bank DNKEY -6.41% saw its shares tumble 6.5% following a report that local prosecutors had uncovered a higher than expected tally of allegedly illegal Russian money moving through its Estonian branch.
Banks world-wide are under increasing pressure to clamp down on the trillions of dollars’ worth of illegal money flowing through the global financial system.
The EU’s anti-money-laundering laws are policed by a patchwork of local regulators, which critics say leaves it open to criminal abuse.
More recently, local regulators have toughened their stance after embarrassing data leaks from whistleblowers on company money laundering and tax avoidance and criticism that the authorities have been too meek in pursuing such transactions.
Other infractions ranged from poor client record-keeping to helping a Suriname client launder money through electronic payment terminals.
Danish authorities have been investigating Danske Bank since a whistleblower flagged issues at its Estonian branch in 2013. The Financial Times reported Tuesday that consultants had found that up to $30 billion of Russian money flowed through the Baltic branch, far higher than previously thought. In a statement, Danske said it wasn’t able to verify the number. The bank expects to publish the findings of an internal investigation into the matter later this month.
“The main concern for investors remains whether the U.S. regulator becomes involved,” Citigroup analysts said. So far Danish and Estonian authorities are leading investigations, but U.S. involvement could see any eventual fines increase substantially, analysts said.
U.S. authorities have already heavily punished European banks for failings in money laundering compliance. In 2014, French lender BNP Paribas SA pleaded guilty and paid $8.97 billion to U.S. authorities to settle charges it disguised transactions with clients in sanctioned countries. Britain’s HSBC Holdings PLC in 2012 paid $1.9 billion to settle U.S. charges that included allowing Mexican drug cartels to launder money through the bank.
In February this year, the U.S. Treasury declared Latvia’s ABLV bank an “institutionalized money laundering” operation and cut its access to dollars. The bank closed down shortly after. Around the same time, Estonian Versobank AS had its bank license revoked by the European Central Bank after regulators found money laundering deficiencies.