Danske Bank A/S yesterday said that it is being investigated by the US Department of Justice (DOJ) about non-resident accounts at its Estonian branch which are at the center of a 200 billion euros (US$230 billion) money-laundering scandal.
The bank said in a statement that it had “received requests for information from the US Department of Justice in connection with a criminal investigation relating to the bank’s Estonian branch conducted by the DOJ,” and was cooperating.
Danske Bank also said it would end its share buyback program after reassessing its capital targets after the Danish Financial Services Authority said its compliance and reputational risks are higher than previously thought.
Danske Bank shares fell 3 percent to 160 Danish crowns, their lowest level since January 2015 and a 33 percent drop so far this year.
Last month, Danske Bank said in an internal report that payments totaling 200 billion euros, many of which it described as “suspicious,” had been moved through its tiny Estonian branch between 2007 and 2015.
The scandal led to Danske Bank chief executive Thomas Borgen stepping down and prompted regulators across the EU to question the oversight of the bloc’s financial sector.
Banks doing business in Estonia handled more than US$1 trillion in cross-border flows, including non-resident flows, between 2008 and 2015, the nation’s central bank said on Wednesday.
In a statement, the central bank said it is not possible to equate non-resident accounts with cross-border transactions, but said it could not provide an estimate for the share of non-resident flows.
Not all non-resident flows are suspicious, though in the Danske case, money launderers allegedly singled out such accounts.
Additional reporting by Bloomberg
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