Founded in 1871 in Denmark, Danske Bank has been a blue-chip name in European banking for more than a century. However, that pristine reputation became tarnished in late 2018 after reports that an Estonian branch of the bank allegedly participated in money laundering activities. The Estonian branch in question was acquired by Danske in 2006 when Danske bought Finnish Sampo Bank. At the time of the purchase, The Financial Times highlighted Sampo Bank’s properties in other countries as a huge boon for Danske, saying, “The deal gives Danske control of Finland’s third-largest bank, but crucially includes Sampo’s existing operations in the high growth areas of Lithuania, Latvia, Estonia, and Russia.” Russia and the Baltic countries may have been high-growth areas, but The Wall Street Journal reports that even before the 2006 deal, Russian Central Bank Deputy Chairman Andrei Kozlov warned Estonian officials that the branch “was servicing customers suspected of financial wrongdoing such as tax evasion or corruption.” They also reported that in 2010, Peter Straarup, Danske’s CEO at the time, was worried about how much money was flowing through this small branch — especially when a great deal of that money was from nonresident clients. He was reassured all was well by Thomas Borgen, the head of international banking for Danske from 2009–2012. Borgen went on to become the CEO of Danske in 2013. In September 2018, after pressure from authorities in Denmark and Estonia, Danske published a report confirming that “its headquarters and its Estonian branch failed for years to prevent suspected money laundering involving thousands of customers,” reported The New York Times. The bank said it was unable to estimate an exact figure for the total value of suspicious transactions identified, but it revealed that its Estonian branch had improbably large flows of approximately $234 billion. The transactions involved more than 6,000 customers from 2007 to 2015 and indicated serious compliance and control failings. The Guardian reported on the wide scope of countries involved, stating, “The Danske scandal involves 32 currencies, companies from Cyprus, the British Virgin Islands and Seychelles. Customers of the Estonian branch have been traced to Russia, Azerbaijan, and Ukraine.” As a result of the scandal coming to light, Borgen resigned. He said in a statement, “It is clear that Danske Bank has failed to live up to its responsibility in the case of possible money laundering in Estonia. I deeply regret this. Even though the investigation conducted by the external law firm concludes that I have lived up to my legal obligations, I believe that it is best for all parties that I resign.”

The whistleblower stated, this financial accounting crime was fathomed to believe at first. Why is that? How would you handle this situation if you were involved? Remember, you must remain ethical in all of your decisions.