Danske Bank has been fined €1.8 million for breaching anti-money laundering and anti-terrorist financing regulations over a nine-year period, leaving thousands of potentially risky customers unchecked.
The Danish bank, which operates a commercial branch in Dublin, failed to screen hundreds of thousands of transactions for signs of illegal activity between 2010 and 2019, according to the central bank.
About one in 40 transactions slipped through Danske’s automated monitoring system because the bank failed to recalibrate it in 2010 to reflect updated anti-money laundering laws in Ireland, the central bank said.
This meant that the first line of defense against criminal financial activity for certain risky customer categories covered by the Criminal Justice Act 2010 was absent and legacy data filters were applied instead. It also meant that the bank could not conduct proper due diligence on these customers.
Danske identified the issue during an internal audit in 2015 but did not rectify it – or even notify its Irish branch or the Irish regulator as required.
Instead, the problem persisted for almost four more years. Finally, Danske addressed the issue internally in October 2018, but didn’t update the central bank until February 2019 — just a month before they updated their systems.
The central bank said the failure to notify regulators was an “aggravating factor” in the case, which was taken into account when deciding how much to fine Danske.
Regulators also noted that Danske was under increased scrutiny back in 2018 before they were made aware of the issue, due to money laundering reports and terrorist financing concerns related to Danske in other jurisdictions.
The bank was initially fined €2.6 million, but this was reduced by 30 percent in line with the central bank’s standard early settlement rebate.
“The Central Bank recognizes that while firms can rely on automated transaction monitoring solutions, they must ensure that the systems used for this purpose are appropriately monitored and correctly calibrated to take into account the actual money laundering or terrorist financing risk faced by the firm exposed,” said Seána Cunningham, the central bank’s director of enforcement.
“In this case, the transaction monitoring system used by the Irish branch was a group-wide automated system from Danske Group, which had applied historical data filters designed to erroneously exclude certain categories of customers from monitoring for a period of nearly nine years. In this case, this led to the serious violations.”
Although Danske is headquartered in Denmark and is therefore regulated by the Danish Financial Supervisory Authority, its Irish branch is subject to conduct scrutiny by the Central Bank of Ireland, including anti-money laundering regulations.
Danske operated in the Republic of Ireland under the National Irish Bank brand. It ended all personal banking services in 2014 after being renamed Danske during the financial crisis.
Danske Bank was embroiled in one of the biggest money laundering scandals in history in 2018 after it was revealed that about $200 billion in suspicious transactions passed through the bank’s Estonian branch, mostly affecting accounts across Eastern Europe.
The scandal led to the resignation of CEO Thomas Borgen and millions of dollars in fines in multiple jurisdictions.
https://www.independent.ie/business/irish/danske-bank-fined-for-long-term-breach-of-money-laundering-rules-41991500.html Danske Bank fined for long-term violation of money laundering regulations