European banking still has a massive money laundering problem

First it was HSBC. Then ING. Now Danske Bank. European banks are still uncovering money laundering on a vast...

Posted: Sep 20, 2018 5:57 PM
Updated: Sep 20, 2018 5:57 PM

First it was HSBC. Then ING. Now Danske Bank. European banks are still uncovering money laundering on a vast scale.

Danske Bank, Denmark's largest bank, admitted Wednesday that an internal investigation had uncovered a large number of suspicious accounts and transactions at its branch in Estonia.

The bank said the branch handled about €200 billion ($235 billion) for around 15,000 foreign clients, some from Russia, between 2007 and 2015. It said that the "vast majority" of the 6,200 customers it has investigated so far were "suspicious."

CEO Thomas Borgen said he would step down once a replacement is found, and Denmark's regulator said it would reopen its own investigation.

But the problem isn't going to disappear with the departure of one executive.

It's not because the European Union's anti-money laundering regulations are weak. It's that they're not very well enforced.

HSBC agreed in 2012 to pay $1.92 billion to settle money-laundering allegations with US regulators. Authorities said HSBC allowed the most notorious international drug cartels to launder billions of dollars across borders.

The case sparked a wave of anti-money laundering campaigns and reforms across the world, including in the European Union.

But more cases keep popping up. ING agreed earlier this month to pay €775 million ($900 million) to Dutch regulators after admitting poor controls allowed criminals to launder money through its accounts.

Fragmented and inconsistent regulation

"There are very limited sanctions enforced in some countries and the supervisory bodies at the national level don't always do their job," said Laure Brillaud, an expert on money laundering with Transparency International.

The main problem: Europe does not have one single organization charged with stamping out the crime. The three main European financial regulators combined have just two officials working full-time on money laundering prevention.

The bulk of responsibility lies with national watchdogs, and some are just not up to the job.

"Recent cases in the banking sector showed that they are not always supervised and enforced with the same high standards everywhere across the EU," said Vĕra Jourová, Europe's top justice official. "Our system is as strong as our weakest link," she added.

Because of the way the European Union works, once dirty money enters the banking system in one of 28 countries, it can be easily moved around.

The European Commission is now proposing stronger rules governing the work of national watchdogs.

The Commission wants EU member states to share more information, and for regulators and banks to talk more.

Red flags were ignored

Brillaud said that penalties imposed on EU member states that fail to police money laundering properly could lead to better oversight, a step the Commission has not yet taken.

Regulators in Europe and the United States have also been pushing banks to do a better job at getting more information about their clients and the sources of their wealth.

Jonathan Peddie, a partner at Baker & McKenzie, said that banks have also been struggling to implement effective controls when it comes to money laundering — especially when it comes to foreign clients.

"Everybody understands what the law says and everybody understands the perspective that they are supposed to take in respect to the risk ... but it's always been very hard for them to meet the expectations," he said.

Danske Bank admitted Thursday that the management of the bank had failed to act on several red flags raised by Russia's central bank and regulators in Denmark and Estonia over the years.

West Lafayette
Overcast
65° wxIcon
Hi: 65° Lo: 45°
Feels Like: 65°
Kokomo
Overcast
55° wxIcon
Hi: 63° Lo: 43°
Feels Like: 55°
Rensselaer
Overcast
57° wxIcon
Hi: 61° Lo: 42°
Feels Like: 57°
Fowler
Overcast
57° wxIcon
Hi: 61° Lo: 42°
Feels Like: 57°
Williamsport
Overcast
61° wxIcon
Hi: 64° Lo: 43°
Feels Like: 61°
Crawfordsville
Scattered Clouds
62° wxIcon
Hi: 65° Lo: 44°
Feels Like: 62°
Frankfort
Overcast
60° wxIcon
Hi: 64° Lo: 42°
Feels Like: 60°
Delphi
Overcast
59° wxIcon
Hi: 64° Lo: 43°
Feels Like: 59°
Monticello
Overcast
59° wxIcon
Hi: 61° Lo: 43°
Feels Like: 59°
Logansport
Overcast
57° wxIcon
Hi: 62° Lo: 42°
Feels Like: 57°
Cooler weather is settling in.....
WLFI Radar
WLFI Temps
WLFI Planner

Indiana Coronavirus Cases

Data is updated nightly.

Confirmed Cases: 117450

Reported Deaths: 3580
CountyConfirmedDeaths
Marion21403766
Lake10618323
Elkhart6667111
St. Joseph6576110
Allen6292203
Hamilton4909109
Vanderburgh371931
Hendricks2747123
Monroe262736
Tippecanoe252313
Johnson2338124
Clark223657
Porter217647
Delaware198562
Cass19549
Vigo184327
Madison168975
LaPorte147441
Floyd138963
Warrick134440
Howard131863
Kosciusko124817
Bartholomew117957
Marshall101224
Dubois99119
Boone98646
Grant93334
Hancock93243
Noble92532
Henry80926
Jackson7689
Wayne76814
Morgan72938
Daviess67728
Shelby67729
Dearborn66528
LaGrange63911
Clinton60914
Harrison58724
Putnam58112
Gibson5305
Knox5259
Lawrence51529
Montgomery51121
DeKalb48711
White48614
Decatur45839
Miami4383
Greene42735
Fayette42313
Jasper3992
Steuben3877
Scott38111
Posey3400
Sullivan33812
Jennings31612
Franklin31125
Ripley3038
Clay3025
Orange28824
Whitley2796
Carroll27713
Adams2743
Wabash2718
Washington2691
Starke2677
Wells2654
Spencer2593
Jefferson2483
Huntington2453
Fulton2412
Tipton22822
Perry22113
Randolph2207
Jay1880
Newton17311
Owen1711
Martin1680
Pike1621
Rush1574
Vermillion1300
Fountain1282
Blackford1203
Pulaski1131
Crawford1080
Brown1043
Parke1032
Benton870
Ohio797
Union790
Switzerland690
Warren401
Unassigned0226

COVID-19 Important links and resources

As the spread of COVID-19, or as it's more commonly known as the coronavirus continues, this page will serve as your one-stop for the resources you need to stay informed and to keep you and your family safe. CLICK HERE

Closings related to the prevention of the COVID-19 can be found on our Closings page.

Community Events