Denmark Targets Offshore Executives of Banks

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 may have funneled more than $9 billion through its Estonian branch between 2007 and 2015, Bloomberg reported.

The Copenhagen-based bank, which is now the target of criminal investigations in Estonia and Denmark, has said it is cooperating fully with the relevant authorities to get to the bottom of the case. Chief Executive Officer Thomas Borgen has publicly apologized for not acting sooner to stop the laundering.

Danish Business Minister Rasmus Jarlov says part “of the frustration has been over how difficult it is to hold management directly responsible for what happened in the branch”. He says that, following the lessons learned from the Danske Bank case, “that’s one of the things we’re tightening”.

Jarlov, who joined the center-right cabinet of Prime Minister Lars Lokke Rasmussen in June, says any new laws wouldn’t carry retroactive powers and therefore wouldn’t 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 European Union.

Jarlov says Denmark has “considerable latitude” to define national standards when it comes to matters such as the size of fines. The measures his ministry is putting together would make Danish anti-money laundering regulation “one of the toughest in Europe”, he said.

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 presented its budget proposal for next year, allocating an extra 15 million kroner ($2.3 million) to fight money laundering and to step up surveillance at the Business Ministry, the Economic Crimes Prosecutor and the Financial Supervisory Authority.