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Danske Bank has agreed to pay a total of $2.4bn in two US investigations to settle charges by the Federal Bureau of Investigation (FBI) and the Securities and Exchange Commission (SEC) in what has been described as Europe’s largest anti-money laundering (AML) scandal. Its Danish case is also set to end today (December 14) with a $0.54bn fine, VIXIO has learned.
On Tuesday (December 13), Danske Bank pleaded guilty to fraud on US banks and agreed to pay $2.059bn to end a criminal investigation by the FBI.
At the same time, the bank also agreed to pay a $413m fine to settle a parallel probe by the SEC.
Meanwhile, the Danish prosecution service told VIXIO that Danske is set to receive a court decision later today (December 14), involving a DKK3.5bn ($500m) fine and confiscation of profits of DKK1.25bn ($170m).
The decisions conclude the investigations in the US and Denmark.
The cases relate to the massive AML scandal which revealed that the Danish bank’s Estonian branch helped launder billions of dollars for customers that were flagged as high risk of money laundering, including funds from the family of the Russian President Vladimir Putin and the Russian security service.
The SEC alleges that, when Danske acquired its Estonian branch in 2007, it knew that its AML risk management procedures were not adequate.
However, it allowed high-risk customers, none of whom were residents of Estonia, to use its services to move billions of dollars in suspicious transactions through the US and other countries.
These transactions generated as much as 99 percent of the Estonian branch’s profits, according to the US regulator.
In addition, Danske Bank admitted that its Estonia branch attracted high-risk customers by ensuring that they could transfer large amounts of money with little oversight.
Bank employees then helped these customers to cover the transactions by using shell companies that obscured actual ownership of the funds.
Throughout those years, Danske Bank Estonia processed $160bn on behalf of these customers through US banks, which were used to process dollar transactions.
“Whether you are a US or foreign bank, if you use the US financial system, you must comply with our laws,” said deputy attorney general Lisa Monaco.
“We expect companies to invest in robust compliance programs — including at newly acquired or far-flung subsidiaries — and to step up and own up to misconduct when it occurs. Failure to do so may well be a one-way ticket to a multi-billion-dollar guilty plea,” she added.
Attorney Damian Williams for the Southern District of New York said Danske Bank “lied and deceived” US banks “to pump billions of dollars of suspicious and criminal funds through the US financial system”.
“In doing so, Danske Bank, the largest bank in Denmark, deliberately disregarded US law of which it is well aware, facilitated the laundering of criminal and suspicious proceeds through the United States, and placed the US financial network at risk, all in the name of its bottom line.”
Danske Bank’s Estonian AML scandal shook Europe. It was the largest such case in the EU, which spurred the European Banking Authority (EBA) to formally look into whether the Estonian and Danish authorities had failed to fulfil their role in fighting money laundering.
