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Denmark watchdog reports Danske’s EY auditors for disciplinary action in money laundering scandal

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 auditors.

Last year the Business Authority reported the local operations of Ernst & Young to police. EY was the external auditor of Danske’s 2014 financial report. The Danish office of EY didn’t immediately reply to calls and an email seeking comment.

The 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.

The news was first reported by Jyllands-Posten.

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.

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