Denmark moves to protect bankers who blow the whistle on dark money

Danish government proposing removal of requirement to notify residents they're being investigated for money laudnering
By Frances Schwartzkopff
|employmentlawtoday.com|Last Updated: 10/03/2019
Danske Bank's headquarters in Copenhagen, Denmark. Danish bank employees are currently required by law to report suspicious transactions, but subjects of investigations are notified Kiev.Victor/Shutterstock

(Bloomberg) -- 

Denmark is proposing steps to protect bankers amid evidence they regularly receive threats for exposing clients involved in suspicious dealings.

The Danish government wants to make it possible to keep bank clients in the dark if they’ve triggered a suspicious activity report. The country’s bankers association, Finans Danmark, is throwing its support behind the proposal, it said on Wednesday.

The focus on banker safety comes as the financial industry digests news of the death of the former head of Danske’s Estonian unit. Aivar Rehe, who had served as CEO of Danske Bank’s branch in Tallinn from 2006 to 2015, was found dead close to his home, police said on Wednesday. Local media have suggested Rehe may have taken his own life. Police didn’t give a cause of death, which they said was out of consideration toward Rehe’s family.

Denmark is still dealing with the fallout of Europe’s worst ever money-laundering scandal, which last year engulfed Danske, its biggest lender. Much of the focus has been on measures designed to tighten existing legislation, including tougher fines and reporting requirements.

But there are signs some of the stricter measures are having unintended consequences. Finans Danmark says bankers in the Nordic country routinely face reprisals from customers who have been reported to authorities because of potentially suspicious transactions.

It’s a “big problem,” the Copenhagen-based organization said in a response to a public hearing.

The government needs to do more to protect bank employees, who by law are required to report suspicious transactions, the finance industry’s union said. Already last year, the union said it was aware of members being targeted and harassed by clients because of the transparency requirement.

Michael Budolfsen, the union’s vice president, said the so-called black-out proposal is good but doesn’t go far enough. Employees’ identities, also when they file whistleblower reports, shouldn’t be distributed to other agencies at all, Budolfsen said in an interview.

“Confidentiality is one thing, but anonymity isn’t automatic,” he said. The person’s name “is still floating around” which is potentially dangerous to them as “we are dealing sometimes with very criminal people.”

The Danske case

Danske has admitted that much of 200 billion euros (US$220 billion) that flowed through its Estonian branch over a nine-year period was suspicious. It’s now the target of several criminal investigations, as well as class-action lawsuits after the scandal gutted its market value. Chris Vogelzang, the new chief executive officer, has made restoring confidence in the bank his top priority.

Under the Danish government’s proposal, tax authorities would no longer be required to notify residents who have been reported to the national office tasked with investigating money laundering. Banks also want to be able to share information about potentially suspicious customers, which is something they’re currently not permitted to do.

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