Danske Investigated by SEC as Money Laundering Case Grows

Feb 21 2019, 9:57 AMFeb 21 2019, 12:04 PMFebruary 21 2019, 9:57 AMFebruary 21 2019, 12:04 PM

(Bloomberg) -- Danske Bank A/S said that the U.S. Securities and Exchange Commission is now conducting an investigation into the Danish lender’s money laundering case.

The bank is already the target of criminal probes in Denmark, Estonia and France. It’s also being investigated separately by the U.S. Justice Department, and is “cooperating with all relevant authorities in order to clarify the full details of the case,” it said in a statement on Thursday.

Shares in the bank declined on the announcement, and traded as much as 5 percent lower in Copenhagen.

News of yet another investigation comes as a $230 billion scandal engulfing Danske continues to spread. Swedbank AB on Wednesday became the latest Nordic lender to be targeted by allegations of money laundering, wiping well over $5 billion off its market value in less than two days.

Though not a surprise, the SEC investigation adds to “uncertainty over potential fines, both U.S. and domestic” and that uncertainty is probably “set to drag into 2020,” said Philip Richards, an analyst at Bloomberg Intelligence in London. “And while we expect total fines in the region of $2 billion to $2.5 billion, there is potential for the final amount to be multiples of that.”

Danske is accused of letting a tiny branch in Estonia become a hub through which illicit funds from the former Soviet Union made their way to the West. The bank’s investors are bracing for fines, potentially of billions of dollars.

“We have no information about when the investigations conducted by DOJ and SEC are expected to be completed, nor do we know what the outcome of these will be. We continue to cooperate with the authorities in order to establish a complete picture of the events of the case,” Jesper Nielsen, interim chief executive officer at Danske, said in the statement.

The SEC deems an investigation necessary when it sees conduct that includes “misrepresentation or omission of important information about securities,” according to its website. It also has the power to levy fines.

Read More: Danske Bank Sued in U.S. Over Estonian Money-Launder Scandal