Ballard Spahr LLP

Authorities Begin to Focus on Individual Responsibility

This week, Danish prosecutors charged Thomas Borgen, the former chief executive officer of Danske Bank, for his involvement in the money laundering scandal arising out of Danske Bank’s Estonian branch, involving an astonishing 200 billion euros ($224 billion) in alleged suspicious transactions. Borgen, whose home prosecutors reportedly raided on March 12, oversaw Danske Bank’s international operations, including Estonia, between 2009 and 2012.

Borgen stepped down as CEO of Danske Bank on the heels of a report released by the Danish law firm Bruun & Hjejle that the bank released, which found the AML procedures at the Estonian branch were “manifestly insufficient and inadequate,” resulting in numerous breaches of legal obligations by the Estonian branch. We previously analyzed that report, here, which concluded — in apparent contrast with the perceptions of Danish law enforcement — that Borgen, along with the Board of Directors and Audit Committee, did not violate any legal obligations. However, Borger resigned in September 2018, stating “Even though I was personally cleared from a legal point of view, I hold the ultimate responsibility. There is no doubt that we as an organization have failed in this situation and did not live up to expectations.”

In November 2018, Denmark’s state prosecutors filed preliminary charges against Danske Bank for violations of the country’s anti-money laundering act in connection with its Estonian branch. Danske Bank is being investigated by authorities in several countries, reportedly including the United States, and is facing tremendous potential fines. (see here, here and here for prior blogs on the investigations). So far, the scandal has led to the closure of bank’s operations Estonia and the seizure of assets from the branch. The scandal has also spread to Swedbank, the largest bank operating in Estonia, which dismissed its CEO, Birgitte Bonnesen, over her handling of allegations that the bank’s Baltic accounts laundered money.

Notably, Borgen is the first person charged in this case. As we often discuss, there is an increased emphasis, at least in the United States, on the government’s stated desire to hold individuals accountable for corporate misconduct, including in the AML context.  Given the magnitude of this scandal and the breadth of the investigations, it is unlikely that Borgen will remain the only executive prosecuted in this scandal.

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