COPENHAGEN – Danske Bank admitted to fraud and agreed to forfeit US$2 billion (S$2.7 billion) to end a long-running US probe into money laundering at its Estonia branch, an embarrassing episode that led to the ouster of top management and pushed thousands of customers to leave.
Denmark’s largest bank pleaded guilty on Tuesday to conspiring to commit bank fraud and admitted providing banking services to suspicious customers – including some in Russia – through its Estonian branch, despite knowing there was a risk of money laundering, the US Justice Department said in a statement.
“For years, Danske Bank lied and deceived US banks to pump billions of dollars of suspicious and criminal funds through the US financial system,” Manhattan US Attorney Damian Williams said in a statement. The largest bank in Denmark “deliberately disregarded US law” and “facilitated the laundering of criminal and suspicious proceeds” through the US financial system, he said.
The scheme was unveiled when an overlooked whistleblower who worked in the Estonian branch contacted Danish media and revealed that the bank had ignored signs indicating “potentially criminal transactions” to move billions of dollars to the West from 2008 to 2017, including from Russian customers, the Justice Department said. Danske Bank said in September 2018 that it failed to adequately screen €200 billion (S$286 billion) in non-resident cash.
The whistleblower, Mr Howard Wilkinson, is an “international hero” whose contributions toward fighting corruption are historic, said his lawyer Stephen M. Kohn, adding that the US Justice Department and the Securities and Exchange Commission (SEC) have “completely validated all of his allegations”.
“We hope this case acts as a warning to all banks that they should immediately report information about Russian money laundering and sanctions-busting to the appropriate authorities,” Mr Kohn said in a statement.
The amount of the fine matches the provisions Danske has set aside to cover the case, most recently in October, when it said it was closing in on agreeing to a $2 billion fine. The Copenhagen-based lender said it will pay the Justice Department US$1.21 billion, the SEC US$179 million and the Danish Special Crime Unit 4.75 billion kroner (S$0.91 billion).
“The resolutions mark the end of the investigations by US and Danish authorities,” Mr Martin Blessing, Danske’s chairman, said in a statement. “We have cooperated since we were approached by the authorities and accept the terms of the resolutions. BLOOMBERG