Denmark’s government wants to introduce stricter laws to target bank executives and make sure top management can be held accountable for misdeeds conducted anywhere in an organization, including all its international units.
The initiative follows allegations that Danske Bank A/S, the biggest Danish lender, became a hub for money launderers who might have funneled more than US$9 billion through its Estonian branch between 2007 and 2015.
The Copenhagen-based bank, which is the target of criminal investigations in Estonia and Denmark, has said it is cooperating fully with the authorities to get to the bottom of the case.
Danske chief executive officer Thomas Borgen has publicly apologized for not acting sooner to stop the laundering.
“[Part] of the frustration has been over how difficult it is to hold management directly responsible for what happened in the branch,” Danish Minister of Industry, Business and Financial Affairs Rasmus Jarlov said.
Following the lessons learned from the Danske Bank case, “that’s one of the things we’re tightening,” he added.
Jarlov, who joined the center-right Cabinet of Danish Prime Minister Lars Lokke Rasmussen in June, said that any new laws would not carry retroactive powers and therefore would not be applied to the Danske case.
Denmark was lambasted last year for its inadequate money-laundering defenses.
A report by the Financial Action Task Force, an inter-government organization that monitors compliance with global regulations, found extensive shortcomings, including no coordinated plans and insufficient resources, as well as a “weak” implementation of anti-laundering measures by banks.
The Danish government is now trying to improve its toolbox for fighting financial crime, within the framework of goals set by the EU.
Denmark has “considerable latitude” to define national standards when it comes to matters such as the size of fines, Jarlov said.
The measures his ministry is putting together would make Danish anti-money-laundering regulation “one of the toughest in Europe,” he said.
For example, Jarlov plans to deny bank executives permits to run a financial institution if they have failed to prevent money laundering in units, at home or abroad that fall under their oversight.
He also aims to apply so-called fit and proper rules to lower-level executives and make banks accountable for criminal behavior by junior executives or other lower-ranking employees
Meanwhile, bills targeting money laundering and other forms of financial crime have stalled, as Danish lawmakers take stock of the Danske scandal and revise their initial proposals.
The government on Thursday last week presented its budget proposal for next year, allocating an extra 15 million kroner (US$2.33 million) to fight money laundering and step up surveillance at the Danish Ministry of Industry, Business and Financial Affairs; the Economic Crimes Prosecutor; and the Financial Supervisory Authority.
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