Nordic Banks Cite Money Laundering Costs in Q1 Results
02 May 2019

Two of Europe’s largest banks on Tuesday blamed Russian money laundering scandals for their lackluster performances in the first quarter of 2019, and promised to do more to prevent compliance lapses going forward.

Helsinki-based Nordea Bank said in its Q1 results that it had set aside €95 million to account for ongoing anti-money laundering (AML) matters. The Finnish lender found itself embroiled in a scandal earlier this year after reports linked it to €700 million in suspicious payments believed to have been made on behalf of a Russian and Lithuanian money laundering ring.

The allegations follow reports in 2014 that Nordea Bank transferred nearly $66 million linked to a separate Russian “laundromat.”

On Tuesday, the bank said it had set aside the sum in expectation of paying a fine to Danish authorities “for our past weak AML processes and procedures.” Along with a rise in unspecified AML-related costs, the €95-million provision negatively impacted the institution’s quarterly performance and contributed to a net income that fell below analysts’ expectations, the bank said.

“Having invested more than EUR 700m in strengthening our risk and compliance activities in 2016-2018, we are confident that our compliance platform is of sounder quality, making us a safe and trusted partner,” Nordea Bank said in the report, which prompted a 4-percent drop in the institution’s shares.

In revising its annual outlook on Tuesday, Danske Bank cited lawsuits by hundreds of shareholders and the launch of at least four criminal probes into its alleged role in handling more than €200 billion tied to the Russian and Lithuanian network. The institution, which saw its shares fall by over nine percent on Tuesday, reported Q1 net profits that were nearly 40 percent lower than those announced in the first quarter of last year.

Danske Bank said in February that it would close its operations in the Baltics and Russia as part of a broader effort to focus on its core markets. Estonia’s financial supervisor separately ordered the lender to cease all activity in the country by the end of the year.

Various authorities in France, Estonia, Denmark and the United States have launched investigations into the Danish bank and at least 170 court cases and shareholder claims have arisen due to the money laundering allegations, according to the Q1 report.

“The timing of the completion of the investigations, the outcome and the subsequent discussions with the authorities are subject to uncertainty,” the report said.

Photo: Friedrich Haag [CC BY-SA 4.0], via Wikimedia Commons

Read more:

Supervisors ignored Russian warnings over money laundering at Danske – document

Money Laundering at Danske Bank: Lessons for financial crime professionals (Part 1)

Danske Bank faces €28 million money laundering probe in France

Count this content towards your CPD minutes, by signing up to our CPD Wallet


You must be logged in to post a comment.

This site uses Akismet to reduce spam. Learn how your comment data is processed.