Danske Bank has been fined €1.8 million by the Central Bank of Ireland for three breaches of the Criminal Justice Act (2010) related to money laundering and terrorist financing - the first time an institution incorporated outside of Ireland has been fined.

The breaches relate to Danske Bank’s automated monitoring system for transactions, which they had implemented in their Irish branch in 2006, and subsequently failed to update in light of the requirements of the Act in 2010.

As such, they neglected to monitor a category of customers’ transactions, some considered medium and high-risk, from 2010 to 2019, according to the CBI. 

The Central Bank said the bank became aware of the issue following an internal audit in May 2015, but failed to inform the Irish branch of the need to change their system, or the Central Bank of their findings.

It is estimated that there were 348,000 unmonitored transactions between 2015 and 2019, or 2.4% of all transactions. 

In Association with

The three breaches were laid out as: 

1. Transaction monitoring - the failure to ensure that the automated monitoring system monitored certain categories of customers, from 2010 to 2019.

2. Enhanced customer due diligence -  failure to provide important due diligence in erroneous transaction monitoring and failing to learn where additional measures needed to be implemented, from 2013 to 2019.

3. Breach in ML/TF policies and procedures - failure to correctly monitor customers’ transactions which in turn led to potential money laundering or terrorism financiers not being monitored. 

The bank’s Irish branch had identified the problem in October 2018 and made the Central Bank aware of the issue in February 2019. 

The fine was reduced by 30% from €2.6m due to an early settlement scheme with the financial regulator. 

Central Bank Director of Enforcement and Anti-Money Laundering Seana Cunningham said the failures to rectify the issue and to notify the Central Bank promptly were aggravating factors.

"The Central Bank expects firms to bring failures to its attention at the earliest opportunity and to act expediently to address identified errors," he stated. 

“The Central Bank will hold firms, including those operating in Ireland on a passporting basis, fully accountable where they fail to take such actions. Anti-money laundering and countering the financing of terrorism compliance is, and will remain, a key priority for the Central Bank.”

Danske Bank, the largest bank in Denmark, is present in Ireland on a ‘freedom of establishment’ basis, where the bank is allowed to ‘passport’ in Ireland.

Although supervised by the Danish Financial Supervisory Authority, the Central Bank regulates it for conduct of business rules.