Danske cleared of sanctions breach, but case isn't over

New York

DANSKE Bank probably did not breach US sanctions when its Estonian unit handled billions of dollars in suspicious funds, meaning the lender could be facing a smaller fine than previously feared.

Denmark's biggest bank has been told by the US Department of the Treasury's Office of Foreign Assets Control (OFAC) that an investigation into it is being closed, a statement on Saturday said.

"OFAC has decided to take no action in relation to civil enforcement of US sanctions in the Estonia case," Philippe Vollot, chief compliance officer at Copenhagen-based Danske, said in an emailed statement.

Still, the bank said Saturday's announcement does not rule out the possibility that OFAC may take "future enforcement action, should new or additional information warrant renewed attention".

Danske has been under investigation for alleged money laundering since admitting more than two years ago that it failed to screen 200 billion euros (S$326 billion) in non-resident flows through its now-shuttered Estonian unit. The bank's own probe into the matter found that a large part of that money was suspicious.

The laundering scandal has put a spotlight on the Nordics - generally considered low on corruption and high on transparency - amid allegations that a number of banks in the region were systematically used as conduits for tainted cash from the former Soviet Union.

The origin of the dirty money that flowed through Danske led to speculation it may have breached US sanctions, which would have increased the likelihood of a substantial fine.

"It's positive that the US Treasury hasn't found wrong-doing" on that front, said Mikkel Emil Jensen, an analyst at Sydbank. "This reduces the fear of a multi-billion-dollar fine and likely takes away some of the risk. The fine should now be smaller, but there are still other investigations, so this doesn't constitute a final resolution for Danske."

The bank said on Saturday it continues to be under criminal and regulatory investigations in Denmark and France. In the United States, the Department of Justice is still probing Danske, as is the Securities and Exchange Commission, it said.

Mr Vollot also said the bank remains "unable to estimate any potential outcome" of its dialogues with the authorities investigating it.

"This, as well as timing, remains uncertain," he said. BLOOMBERG