Denmark’s business watchdog said it has brought two auditors before a disciplinary board after concluding they violated regulations while reviewing Danske Bank A/S, the lender caught up in Europe’s biggest money laundering scandal.
The Danish Business Authority said the auditors’ work on the bank’s 2014 financial statements “was not performed in accordance with generally accepted auditing standards and not sufficiently documented,” according to a statement dated Jan. 28. The agency didn’t name the people.
Danske’s auditors have come under fire for failing to pick up signs of possible money laundering at Copenhagen-based Danske. Last year the Business Authority reported to police the local operations of Ernst & Young, which was the external auditor on Danske’s 2014 financial report.
The chief executive officer of EY in Copenhagen, Torben Bender, confirmed in an email that it was EY auditors who worked on the account, and said in that the company disagrees with the authority’s findings.
“We have always and continue to maintain that our audit was robust and undertaken in accordance with the relevant regulations and practices,” Bender said. “We will vigorously defend any allegations made against EY Denmark at the Disciplinary Tribunal for Auditors.”
The Business Authority said it began its investigation into the auditors after Danske released in September 2018 the results of a commissioned investigation into its Estonian operations. The probe, more than a year in the making, concluded that large part of around $220 billion in transactions at the unit were suspicious.
The auditors failed in their 2014 audit to show they had taken into full account information that was available to them and that was later included in Danske’s 2018 money laundering review, according to the statement.
Additionally, “the auditors have not proved that they obtained sufficient and appropriate audit evidence regarding the valuation of goodwill associated with the Estonian branch of Danske Bank,” the Danish Business Authority said.
Danske Bank faces criminal investigations in the U.S. and Europe, as well as lawsuits from investors who allege the bank failed to inform the market of developments in Estonia. Danske shares have lost roughly half their value since 2018.