The Danish government has reported Big Four auditor EY to the domestic fraud squad to investigate whether the firm broke money laundering rules when it audited Danske Bank in 2014.
The Danish Business Authority, a government agency, said it had conducted its own investigation into EY’s 2014 audit of Danske and found the firm had discovered information about potential money laundering issues at the bank.
The firm should have made further inquiries and reported the matter to the authorities at the time, according to the business authority. It said on Friday it had asked the Danish state prosecutor to launch a police investigation into whether EY violated laws against money laundering and terrorist financing.
Danske’s money laundering scandal started in 2007 and stretched until 2015, with €200bn of non-resident money — much of it suspicious and from Russia — passing through its Estonian branch during the period.
The referral to Denmark’s fraud investigators is a fresh blow to EY and the wider audit industry, which has come under heavy criticism during the past 18 months following a series of high profile corporate scandals involving the Big Four firms.
EY was one of a number of audit firms that vetted Danske’s financial statements during the period when money laundering activities allegedly took place at the bank.
The Danish Business Authority launched an investigation of EY, as well as Deloitte, KPMG, PwC and Grant Thornton, in October to assess whether they had fulfilled their anti-money laundering duties with respect to their audit work for Danske up to 2015.
The Danish Business Authority has not explained why it is focusing on 2014, which is just after the peak year for the scandal in 2013, when about €35bn flowed through the Estonian branch. The government agency said it was still investigating the audit conducted in 2013.
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