Danske Bank Money Laundering Scandal Faces US Probe

US Federal prosecutors have started a criminal investigation against Denmark’s Danske Bank.

The Danish bank has taken a massive hit to its reputation in relation to what is being termed as the biggest money laundering scandal in Europe.

Danske Bank made the headlines recently over a €200 billion money-laundering scandal. A number of financial regulators have taken note of the scandal but things have become worse for Danske after the Department of Justice (DoJ) decided to launch an investigation.

Danske Bank recently admitted that the DoJ had launched an investigation but did not put a timeline on the investigation and probe. The bank did promise that they would be fully cooperative in the investigation.

In a statement, Jesper Nielsen, Danske's interim chief executive said

We are co-operating with the authorities investigating us as a result of the case. However, it is too early to speculate on any outcome of the investigations

The previous CEO of the company, Thomas Borgen, already resigned because of the disclosure that he ignored the warnings about potential money laundering in the Estonia branch of the company. The Danish government has already taken steps to ensure that Danske would avoid the fate of ABLV, a Latvian lender which was forced to liquidate its holdings to pay off heavy fines that it faced after a similar scandal.

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Some analysts are predicting that it will be a close call though, with the bank potentially facing billions of dollars in fines because of the money laundering allegations. Financial experts estimate that these potential fines could be between $6.2 billion to $7.7 billion.

Danske Bank Trying To Stay Afloat

It is only going to get worse for the bank as the investigation continues. Bill Browder, CEO of Hermitage Capital Management and an outspoken critic of the Russian government, has requested US regulators to use the Patriot Act to block any banks clearing dollars for Danske. This is similar to what happened to ABLV. Browder says this move is to show that money laundering should have tough consequences.

Danske Bank is already feeling the heat as shares in the bank fell by two percent. This adds to the current decline in share prices which has now reached a 24 percent decline in just seven months. With at least six major countries investigating the probe, the bank will most likely be in hot water in the near future. The bank has already had to stop its share buyback program to ensure that it stays solvent in the near future.

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