Welcome to our press conference 19 September 2018
Participants Ole Andersen, Chairman of the Board of Directors of Danske Bank Carol Sergeant, Vice Chairman of the Board of Directors of Danske Bank Ole Spiermann, Partner at the Bruun & Hjejle law firm Jørn P. Jensen, Member of the Board of Directors of Danske Bank and Chairman of the Audit Committee Thomas F. Borgen, CEO of Danske Bank 2
Danske Bank has not The case in no way We take the combating lived up to its reflects the bank we of money laundering responsibility want to be and financial crime very seriously 3
The investigations conclude that The problems The first were much larger warnings came than originally back 2007 assumed Lack of Inadequate AML management in procedures in Estonia and at Estonia Group level 4
The investigations have had consequences Donation Staff-related Reporting to authorities consequences 42 reports to the authorities Research, training, projects and Warnings other initiatives aimed at Dismissals 8 reports to the police combating financial crime Loss of bonus payments 5
Reflections of the Board of Directors 1 Great caution when making acquisitions outside core markets Focus on integration and effective implementation 2 of controls and systems Cultural integration is decisive for transparency and trust 3 6
Governance of the investigation Carol Sergeant, Vice Chairman of Danske Bank’s Board of Directors
The investigation • Text 1 What exactly Wish for objective and Around 70 persons happened at the complete investigations have worked full-time branch in Estonia on the investigations Comprehensive and objective investigations led by the Bruun & Hjejle law firm 8
Two overall tracks of investigation Investigation of the Investigation of accountability non-resident portfolio • 15,000 customers • Institutional and individual accountability • 9.5 million payments • 12,000 documents • Internal collusion • 8 million e-mails 9
1 9 S E P T E MB E R 2 0 1 8 Non-Resident Portfolio at Danske Bank’s Estonian branch, 2007-2017
Flow of the customers of the Non-Resident Portfolio 11
Development of the Non-Resident Portfolio 4.500 4.000 3.500 3.000 2.500 2.000 1.500 1.000 500 0 2007 2008 2009 2010 2011 2012 2013 2014 2015 CORPORATE ENTITIES PRIVATE PERSONS TOTAL 12
Inadequate AML procedures at the Estonian branch Obligations AML failings re Non-Resident Portfolio at the Estonian branch Lacking knowledge of customers Lacking identification of (ultimate) beneficial owners and Due diligence “controlling interests” Customers included so-called intermediaries, which were unregulated and represented unknown end-customers Insufficient attention to customer activities Lacking identification of the source and origin of funds No screening of customers against lists of politically exposed Monitoring persons No screening of incoming payments against sanctions or terror lists In general, no automatic screening of incoming payments Reporting Lack of response to suspicious customers and transactions 13
Sources and participants – customers, transactions and potential internal collusion Sources Information on customers CIM TEAM Approx. 10 mill. payments Other material 14
Sources and participants – course of events and accountability Sources More than 8 million emails and attachments Review of more than 12,000 documents, including 4,000 emails 74 interviews with 49 persons 15
Deposits for non-resident customers in Baltic banks 16 14 12 EUR BILLION 10 8 6 4 2 0 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 DEPOSITS OF THE NON-RESIDENT PORTFOLIO IN THE ESTONIAN BRANCH TOTAL DEPOSITS OF NON-RESIDENTS IN ESTONIA TOTAL DEPOSITS OF NON-RESIDENTS IN THE BALTICS 16
The Non-Resident Portfolio – and other customers subject to investigation 15,000 non-resident customers pursuant to broader definition 10,000 customers in the Non-Resident Portfolio 17
Geographical distribution of the Non-Resident Portfolio 18
Applied model of analysis 19
Geographical distribution of flow of the Non-Resident Portfolio Incoming funds Outgoing funds Estonia (23 %) Estonia (15 %) Russia (23 %) Latvia (14 %) Latvia (12 %) China (7 %) Customers in the Non-Resident Cyprus (9 %) Switzerland (6%) Portfolio UK (4 %) Turkey (6 %) Other (30 %) Others (52 %) 20
Historical SARs and inquiries from the Estonian FIU 21
Suspicious non-resident customers Approximately 6,200 customers deemed suspicious 22
Key events from 2007 to 2014 2007 2008-2012 2012-2013 H1 2014 Acquisition of Sampo No integration of IT- Inquiries from the DFSA Group Internal Audit to Group in 2012 and Pank platform for Group and reports in January and the Baltics in 2008 2013 February Critical inspection EFSA inspection report Meeting with the EFSA i Working group report by EFSA in 2009 2013 established Letter from the Russian Reassuring reporting Termination of Customer review of the Central Bank from Group Internal correspondent banking Non-Resident Portfolio Audit and Group relationship in 2013 Compliance & AML Business review of the Non-Resident Portfolio in 2013 Whistleblower report at the end of 2013 23
Reponses to whistleblower and GIA reports in 2014 Responsibility for reporting is unclear Reporting to FSAs Reporting to neither the Danish FSA nor the Estonian FSA takes place Responsibility for investigation into allegations is unclear Whistleblower allegations Insufficient investigation of allegations takes place Customer review is organised and executed inadequately Customer review No action against branch management HR action No effective response to the identified AML risk Identified AML risk No ”look back” 24
Key events from 2014 to 2017 H2 2014 2015 2016 2017 New policy regarding the Termination of Highly critical inspection “Russian Laundromat” Non-Resident Portfolio correspondent banking report from the DFSA with relationships reprimand Strategy discussions Final precept by EFSA Promontory’s root -cause regarding the Baltics at with orders analysis both the Executive Board and the Board of Directors New, highly critical EFSA Termination of the Non- “Azerbaijani Laundromat ” inspection report Resident Portfolio Extended investigations 25
Termination of the Non-Resident Portfolio Note : Historical graph reported by Danske Bank in 2017. 26
Standards of accountability Employment contracts and employment law The duties of members of Board as found in statutory law and internal procedures Fitness and propriety Civil liability (tort) Criminal liability 27
Involved persons and departments Board of Directors / Audit Committee CEO Executive Board Baltic Banking/ International Banking Estonian branch 28
Danske Bank’s compliance and AML work Jørn P. Jensen, Member of the Board of Directors of Danske Bank and Chairman of the Audit Committee
We have taken a number of initiatives to address the problems in Estonia The portfolio of non-resident customers was closed down by the end of 2015 New management across the Baltic countries Independence of local control functions has been strengthened The Baltic units have been transferred to the joint IT platform In future, we will serve only subsidiaries of Nordic and international customers 30
Initiatives to improve general efforts across the Group 1 Stronger compliance culture and more knowledge Investments in more employee resources, 2 new IT systems and stronger competencies Stronger organisation and internal procedures 3 31
In coming years, we will continue to improve our efforts to combat financial crime 32
Ongoing implementation of orders from the Danish FSA New Chief Compliance Group assessment of New initiatives and Officer to take up office management and procedures to ensure governance at the prompt investigation and branch in Estonia escalation of issues Implementation of Integration of compliance Central unit at Group level to Pillar II capital add-on as a fundamental part of ensure transparency and the culture completeness in our interaction with the Danish FSA 33
34
Recommend
More recommend
