DNKEY Danske Bank AVS (PK)

By Samuel Rubenfeld 

The head of compliance for Danske Bank is resigning as the Denmark's largest bank continues to confront a money-laundering scandal in Estonia.

Danske Bank launched an internal investigation last year following reports in Danish media alleging that its Estonian branch was used to launder money from 2007 to 2015. The bank on Wednesday said it expects to complete the investigation in September.

Management at the bank also said on Wednesday it was aware for a while of Anders Meinert Jørgensen's plans to step down as compliance chief and expects to replace him soon. "For a while now I have thought about doing something else -- possibly not even in the financial sector, " Mr. Jørgensen said.

He has led the compliance group at the bank since 2014, and Mr. Jørgensen said the resignation is unrelated to the money-laundering scandal.

Danske Bank has declined to comment on the specifics of the money-laundering allegations until the investigation concludes. It has, however, found there were insufficient controls to prevent money laundering at the Estonian branch, and has acknowledged that foreigners took advantage of the lack of controls, potentially using the bank for money-laundering purposes.

"Only the authorities can decide whether money laundering did in fact take place," the bank said on its website.

Danske Bank also faces other accusations concerning potential money laundering through its Estonian branch.

Hedge-fund manager Bill Browder has alleged that Russians have laundered more than $8 billion through the bank, and said he plans to submit his findings to Danish authorities. Mr. Browder has said the laundered money was connected to a tax fraud discovered by his attorney, Sergei Magnitsky, who died in Russian custody after authorities there accused him of carrying out the fraud.

"I would expect there to be legal consequences, not just career consequences, for those who either played a role in the money laundering that led to the murder of Sergei Magnitsky, or turned a blind eye to allow it to happen," said Mr. Browder in an interview on Wednesday.

A Danske Bank spokesman declined to respond to Mr. Browder's comments.

The bank has known about the issues surrounding its Estonian branch for years, according to a timeline posted on its website. The bank received an email in December 2013 from an internal whistleblower who pointed to a lack of controls at the Estonian branch. The bank's internal audit department initiated a probe in February 2014, and within two months determined that the controls at the branch were lacking. It shut down its "nonresident portfolio" at the Estonian branch by 2015, but widened its probes last year following the media reports.

The bank was reprimanded in May by Danish regulatory authorities, who said there were serious deficiencies in its governance and it acted too late on the information concerning the lack of anti-money-laundering measures.

"On the basis of the knowledge we have today about the extent of suspicious activities, it is clear than we should have acted faster and more forcefully. Among other things, we should back then have launched a thorough investigation into the activities in that portfolio," the bank has said.

Write to Samuel Rubenfeld at samuel.rubenfeld@wsj.com

(END) Dow Jones Newswires

July 11, 2018 17:57 ET (21:57 GMT)

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