COPENHAGEN: Danske Bank said it’s been placed under formal investigation in France over suspected money laundering at its Estonian branch.
The action on Thursday reverses an earlier decision by French authorities and comes just as the bank appeared to be recovering from the biggest dirty-money scandal in its history and possibly Europe’s.
A large chunk of US$230 billion that flowed through its non-resident portfolio in Tallinn between 2007 and 2015 is considered suspicious in origin.
The Copenhagen-based bank said the French investigation covers transactions from 2007 to 2014 amounting to around 21.6 million euros (US$24.5 million). Danske said it had been ordered to post bail for 10.8 million euros.
Danske had already been placed under formal investigation in France in October 2017, only to have its status changed to assisted witness in January 2018.
The bank signalled last month that its status might change again after it was accused of “openly lying” to French authorities by Bill Browder, the co-founder of Hermitage Capital Management who’s made a mission of tracking dirty money through the financial system.
French investigative judges can charge companies when there are “serious and consistent” indications of criminal wrongdoing.
They can then decide after investigating whether to refer a case to trial but aren’t involved after that stage.
Prosecutors in Paris accuse Danske of having helped launder proceeds from tax evasion through transactions carried out in France and “in particular in Estonia and in Luxembourg.”
According to the charges, as published by Danske, the bank aided laundering “by investing, concealing, or converting the direct or indirect proceeds of offences, by opening fictitious pass-through accounts which were designed to receive money from organised tax evasion, and by allowing these accounts to be debited with multiple transactions carried out in the context of set-off mechanisms, without any economic justification.”
The beneficiaries of the transactions included offshore companies, according to the charge. Names were redacted.
The laundering scandal, in which it’s alleged that billions of dollars flowed from the former Soviet Union and into the West until as recently as 2015, has made Danske the target of numerous criminal investigations, including in the US With investors bracing for hefty fines, the scandal wiped about 47% off Danske’s market value last year.
Danske said that it’s cooperating with French authorities. Representatives at the office of France’s financial prosecutor, the Parquet National Financier, declined to comment.