Danish watchdog could face EU inquiry over Danske Bank scandal

"We do not yet know the exact details concerning EBA's inquiry, but it is our understanding that EBA will focus on the FSA's handling of the anti-money laundering supervision at group level and on the exchange of information with the Estonian supervisory authority," said Jasper Berg, director-general of the FSA, in comments reported by Dow Jones.

Berg added that the FSA is "ready to cooperate fully with EBA as well as with other European institutions" and fully account for its anti-money laundering practices.

The Danske Bank case, in which the bank admitted that it had allowed $233 billion to move unchecked through its Estonian branch between 2008-2015 has shocked both the Danish population as well as EU supervisors.

The EU’s justice commissioner, Vera Jourova has described the scandal as "a very unpleasant lesson for the EU".  Any subsequent investigation is likely to look into possible shortcomings around anti-monye laundering in both the Estonian and Danish banking systems as well as at the EU level.

At the same time, BaFin, Germany's banking regulator, has issued a public reprimand to Deutsche Bank over the dilligence of its efforts to combat financial crime within its corporate and investment banking divisions. According to a Dow Jones report the bank was criticised for missing reporting deadlines alongside other procedural lapses.

A statement issued by Deutsche Bank accepted responsibility for these shortcomings and it pledged to work with accounting firm KPMG "to fulfill the regulatory requirements as soon as possible". 

Deutsche's efforts have not been helped by an unusually high level of turnover within its compliance staff - the latest of which was the appointment of London-based senior risk officer, Stephan Wilken, to be head of anti-financial crime and chief of anti-money laundering, from the beginning of October.