Danske Bank CEO quits in $234 billion money laundering scandal

Danske Bank CEO quits in $234 billion money laundering scandal

"It has been clear to me for some time that resigning would be the right thing to do", he said in a statement, "but I have held off the decision, because I have felt a responsibility for seeing the bank through this hard period towards presentation of the investigations".

Earlier this month, the Wall Street Journal reported that US law enforcement agencies were also investigating money laundering flows through Danske Bank. He will stay on at the bank until a replacement is found.

The Estonian authorities launched a criminal investigation into the money-laundering at the end of July, prompted by a complaint by none other than Hermitage Capital chief Bill Browder, one of the Kremlin's bêtes noires.

Danske Bank CEO Thomas Borgen announced that he would step down as the results became public. Picture taken July 24, 2014. He said there's reason to believe a large part of the $234 billion at the Estonian branch "potentially can be classified as suspicious".

The bank has exonerated its board, chairman and CEO of breaching legal obligations, dismissed or reprimanded various employees and managers, and apologized to everyone. It has reported them to the authorities. ING Group NV paid a $900 million settlement in a money laundering case this month.

Estonia's Baltic neighbour Latvia has been in the centre of various banking scandals, including money laundering, for years after it became a hub for worldwide banking, mainly from neighbouring Russian Federation and eastern European states like Ukraine.

And earlier this year US authorities accused Latvia's ABLV of covering up money laundering, leading to the bank being denied USA dollar funding and its swift collapse.

And when a whistleblower raised problems at the Estonian branch in early 2014 the allegations were not properly investigated and were not shared with the board, Danske said, adding that measures to get its business there under control had been insufficient.

The branch's handling of Russian and ex-Soviet money has also been the focus of an inquiry in Estonia itself.

While Danske does not have a banking licence in the United States, banning USA correspondent banks from dealing with it would amount to shutting it out of the global financial network.

"The report describes serious shortcomings in the organisation of Danske Bank, where risk-appetite and risk control were not in balance", the head of Estonia's FSA financial regulator Kilvar Kessler said in a statement.

The bank, with its shares falling by eight per cent following the release of the report, also lowered its expectations for annual net profit to 16 billion to 17 billion Danish crowns, from a previous range of 18 billion to 20 billion.

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