"It's correct, there is a draft for a police report," spokesman for the Financial Supervisory Authority (FSA), Soren Christensen, told Reuters.

According to Danish daily Jyllands-Posten, which first reported the story, the information prepared for the police is still subject to approval by FSA management.

Danske Bank declined to comment on ongoing investigations.

The FSA said in June it was investigating the bank for failing to inform customers that it expected a poor performance from its Flexinvest Fri investment product, and for continuing to sell it to new customers.

"At the time when the bank sold the product, it expected customers' return after fees to be less than the zero-percent rate on their deposit accounts," the FSA said in June.

Danske, which fired former interim CEO and head of its domestic bank Jesper Nielsen as a result of the scandal, said in June it would compensate 87,000 Flexinvest Fri customers, costing the bank around 400 million Danish crowns (£49 million).

The dismissal of Nielsen was the first major change since CEO Chris Vogelzang took charge in June with a mission to restore trust in the lender after its involvement in a major money laundering scandal.

(Reporting by Nikolaj Skydsgaard; Editing by Mark Potter)