UPDATE 1-Copenhagen bank suspected of breaching money laundering act, says Danish watchdog

(Adds statement from bank, prosecutor)

COPENHAGEN, Aug 23 (Reuters) - Denmark’s financial watchdog said on Thursday it had asked the state prosecutor to investigate Copenhagen Cooperative Bank for a suspected breaching of the country’s money laundering act.

Based on an inspection in June, the Financial Supervisory Authority (FSA) said it suspected the small retail bank did not take appropriate measures to counter the risk of money laundering or terrorist financing in certain customer relationships, the FSA said in a statement.

Morten Schwartz Nielsen, Copenhagen Cooperative Bank’s chairman since May, and board member Lars Bytoft in a statement blamed the former management for “irregularities in relation to money laundering” and “economic dispositions in violation of the interests of the bank”.

They said the board had expelled two leading employees, whose names they did not disclose, and had asked the police to investigate the matter.

Nielsen and Bytoft did not respond when contacted by Reuters via email and phone.

The State Prosecutor for Serious Economic and International Crime confirmed it had received the report from the FSA and said it would look into it.

The prosecutor earlier this month started a criminal investigation into Denmark’s largest lender, Danske Bank , over allegations it had been involved in money laundering through its Estonian branch. (Reporting by Teis Jensen; Editing by Jacob Gronholt-Pedersen and Mark Potter)