UPDATE 2-Denmark to investigate Danske Bank over money laundering allegations

* Estonia launched similar investigation last week

* Danske has admitted to past flaws in Estonia controls

* Results of bank’s own investigation expected in September (Adds details on possible penalties)

COPENHAGEN, Aug 6 (Reuters) - Denmark’s state prosecutor has started a criminal investigation into Danske Bank over allegations the country’s biggest lender had been involved in money laundering through its Estonian branch.

The investigation, which follows a similar step by Estonian authorities last week, concerns transactions worth billions of Danish crowns that might have been part of criminal money laundering, Denmark’s state prosecutor said.

Danske Bank shares have fallen almost a quarter this year after Danish newspaper Berlingske alleged its Estonian branch was involved in laundering some 53 billion Danish crowns ($8.2 billion) between 2007 and 2015.

Danske Bank has admitted to flaws in its anti-money laundering controls in Estonia in the past and has launched its own inquiry, the results of which are expected in September.

The Danish prosecutor said it was too early to say whether its investigation would lead to criminal proceedings.

It also said it had received a number of criminal complaints in the case. Bill Browder, once the biggest foreign money manager in Russia, last month filed criminal complaints in both Denmark and Estonia concerning Danske Bank.

“We will of course assist the Danish Public Prosecutor for Serious Economic and International Crime (SØIK) in its investigation,” Flemming Pristed, Danske Bank’s group general counsel, said in an email.

“We have a good and constructive dialogue on an ongoing basis with the authorities, and we will be at the service of SØIK if it needs further clarification on specific matters,” he said.

The prosecutor said it had already gathered extensive investigative material and was working with a number of international partners on the case.

“Money-laundering crime does major harm to our society, and the law contains strong possibilities for penalties if financial companies don’t do enough to prevent black money from being laundered,” general prosecutor Morten Niels Jakobsen said in a statement.

In practice, the size of fines are determined by the total amount of suspicious transactions that a financial institution has not handled correctly, according to the prosecutor.

“This means that the fine significantly exceeds the profit,” the statement said.

Danske Bank said last month it should not benefit financially from “suspicious transactions” in Estonia and it would forgo profits generated from any such transactions.

Gross profits from its non-resident portfolio in Estonia between 2007 and 2015 amounted to 1.5 billion Danish crowns, Danske said.

$1 = 6.4446 Danish crowns Reporting by Stine Jacobsen and Jacob Gronholt-Pedersen; Editing by Alexander Smith and Mark Potter