Danske Bank fooled US institutions for years to move billions of dollars
According to US court records, Danske Bank misled US banks in order to get access to the financial system for the lender's high-risk customers who lived outside of Estonia, especially in Russia.
The bank's guilty plea and $2 billion penalty "show that the Department of Justice will vigorously protect the integrity of the United States' financial system against tainted foreign money - Russian or otherwise," said Deputy Attorney General Lisa O. Monaco.
“Whether you are a U.S. or foreign bank, if you use the U.S. financial system, you must comply with our laws. 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.
The Justice Department's harsh stance was echoed by officials from the Attorney General's Office and the Southern District of New York.
Assistant AG Kenneth A. Polite said: “Danske Bank lied to U.S. banks about its deficient anti-money laundering systems, inadequate transaction monitoring capabilities, and its high-risk, offshore customer base in order to gain unlawful access to the U.S. financial system.”
Danske Bank acknowledged responsibility for cheating US financial institutions and funnelling billions of dollars in questionable and unlawful transactions, according to AAG Polite of the Justice Department's Criminal Division.
“As part of its guilty plea, Danske Bank will forfeit over $2 billion and implement significant changes to its compliance program and AML controls. This coordinated resolution with the Securities and Exchange Commission (SEC) and Danish authorities sends a clear message that the Department of Justice stands ready to work with our partners around the world to investigate corporate wrongdoing and hold bad actors accountable for their criminal conduct.”
‘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 U.S. financial network at risk, all in the name of its bottom line. The bank is now being held to account’
ATTORNEY DAMIAN WILLIAMS FOR THE SOUTHERN DISTRICT OF NEW YORK
“For years, Danske Bank lied and deceived U.S. banks to pump billions of dollars of suspicious and criminal funds through the U.S. financial system,” said U.S. Attorney Damian Williams for the Southern District of New York.
“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 U.S. financial network at risk, all in the name of its bottom line. The bank is now being held to account.
“For its years-long criminal conduct, today Danske Bank pleaded guilty to conspiring to commit bank fraud, will forfeit over $2 billion, and will implement and maintain a revamped compliance program and AML controls. Banks and other financial institutions around the world should heed this message: If you want to use the U.S. financial system, you must play by the rules. If you don’t, we will hold you accountable.”
“Danske Bank’s guilty plea for defrauding U.S. banks should serve as a stark warning to others that we will uncover the truth and deliver accountability,” said FBI Deputy Director Paul Abbate.
“The FBI, working with international partners, will vigorously investigate any institution, wherever based, which is engaged in manipulating U.S. financial systems to enable money laundering. The FBI remains committed to safeguarding our national and economic security from threats which could cause harm to American institutions.”
According to confessions and court papers, Danske Bank provided banking services in Estonia through its branch, Danske Bank Estonia, between 2008 and 2016. Danske Bank Estonia had a profitable business line known as the NRP that served non-resident customers.
Danske Bank Estonia drew NRP customers by assuring that significant sums of money could be transferred through the bank with minimal, if any, scrutiny. Employees of Danske Bank Estonia colluded with NRP customers to conceal the true nature of their transactions, including the use of shell companies that concealed actual ownership of the funds.
Access to the US financial system through US banks was crucial for Danske Bank and its NRP customers, who relied on US institutions to conduct US dollar transactions. Danske Bank Estonia processed $160 billion on behalf of the NRP through US banks.
Danske Bank and Danske Bank Estonia were required by US banks to disclose information in order to open and maintain accounts, including information about anti-money laundering (AML) measures, transaction monitoring, and customers. Danske Bank was aware that US banks expected honest, thorough, and accurate responses and that US banks would not retain or open US currency accounts for Danske Bank Estonia unless the appropriate information was provided.
Danske Bank knew, at least by February 2014, that some NRP customers were engaging in extremely suspect and potentially criminal transactions, including transactions through U.S. banks, as a consequence of internal audits, information from regulators, and an internal whistleblower.
Danske Bank was also aware that Danske Bank Estonia's anti-money laundering programme and processes did not exceed Danske Bank's standards and were insufficient to address the NRP's risks. Rather of giving accurate information to US banks, Danske Bank misled about the health of Danske Bank Estonia's AML compliance programme, transaction monitoring capabilities, and information about Danske Bank Estonia's customers and risk profile.
Danske Bank entered a guilty plea today to one count of conspiracy to commit bank fraud. The corporation has committed to a criminal forfeiture of $2.059 billion under the terms of the plea agreement. Danske Bank will also enter into separate criminal or civil settlements with domestic and international authorities, and the department will credit the bank's payments to the SEC and Danish authorities totaling $850 million.
The agreement struck with Danske Bank was based on a number of considerations, including the nature, seriousness, and pervasiveness of the offending activity.
This included a bank fraud conspiracy in which Danske Bank deceived U.S. banks in order to maintain and, in one case, open U.S. dollar accounts through which Danske Bank processed $160 billion for its non-resident customers; the bank's failure to voluntarily and timely disclose the conduct to the department; the state of Danske Bank's compliance programme and the progress of its remediation; and the bank's resolutions with other domestic and foreign authorities, including the imposition of sanctions.
Danske Bank received full credit for cooperation and remediation because it cooperated fully with the investigation and demonstrated recognition and affirmative acceptance of responsibility for its criminal conduct, including, among other things, voluntarily and expeditiously producing a significant amount of documents located outside the United States in ways that did not implicate foreign data. Danske Bank has also strengthened and committed to further improve its compliance systems, as well as agreeing to the recruitment of an independent expert chosen by its regulator.
Furthermore, the SEC announced today a separate settlement with Danske Bank in connection with a similar, parallel investigation. Danske Bank agreed to pay approximately $413 million under the terms of that resolution, which includes a civil monetary penalty of $178.6 million as well as disgorgement, which will be credited to any payments made to Danish authorities or the department in connection with Danske Bank's guilty plea.
The FBI is looking into the matter.
The case is being prosecuted by Trial Attorneys Margaret A. Moeser and Patrick B. Gushue of the Criminal Division's Money Laundering and Asset Recovery Section (MLARS), as well as Assistant U.S. Attorneys Tara M. La Morte and Sheb Swett of the Southern District of New York. The Justice Department's Office of International Affairs was crucial in this case.
The department appreciates the substantial assistance provided by the SEC and the Danish authorities. The department also thanks Estonian authorities for their help in responding to many Mutual Legal Assistance petitions.
The Bank Integrity Unit of MLARS investigates and prosecutes complicated, multi-district, and worldwide financial institution criminal crimes. The unit prosecutes banks and other financial institutions, as well as their officials, managers, and workers, whose actions endanger the integrity of the individual institution or the financial system as a whole.
By fLEXI tEAM