One of the greatest AML scandals recently has been resolved by Danske Bank, the largest bank in Denmark, which admitted defrauding US banks and agreed to pay a $2BN fine.
Following an investigation into billions of dollars in illegal transfers that came from high-risk clients in Russia and other countries, Danske entered a guilty plea to bank fraud on Tuesday and agreed to forfeit the $2 Billion as part of an arrangement with the United States.
The US Justice Department announced the news on Tuesday evening.
After a thorough investigation of the bank's actions in several nations, including Great Britain, Denmark, and Estonia, it is the first time the United States has taken action against the bank.
In addition to entering a plea to the criminal charge, the bank also reached a settlement of a civil investigation with the U.S. Securities and Exchange Commission (SEC).
The bank agreed to forfeit around $1.2 billion to the US and acknowledged one count of conspiring to conduct bank fraud.
In addition, it will pay $672 million to Danish authorities and $178 million in civil penalties to the US Securities and Exchange Commission, the primary watchdog over Wall Street.
In relation to anti-money laundering controls in its Estonian office, Danske, according to the Justice Department, had misled US lenders, allowing "high-risk customers," some of whom were from Russia, to enter the US financial system.
In a statement, Lisa Monaco, the US deputy attorney general, said that the action "demonstrate[s] that the Department of Justice will fiercely guard the integrity of the US financial system from tainted foreign money — Russian or otherwise."
According to the Justice Department, payments totalling $850 million will be credited to the bank and utilized to settle other criminal and civil allegations with the SEC and Danish authorities.
The bank admitted in court filings that between 2008 and 2016, it deceived American institutions by enabling high-risk non-resident customers from other nations, particularly Russia, to use its Estonian branch.
According to the prosecution, the bank's Estonian branch enticed customers by guaranteeing they could move substantial sums of money with little supervision.
According to the Justice Department, bank personnel allegedly made an effort to conceal the criminal nature of the transactions by utilizing shell companies to disguise the ownership of the funds.
As a result, Russian and other high-risk customers were given access to U.S. banks, which in total processed $160 billion on their behalf.
Prosecutors claimed that the bank was also aware that the anti-money laundering program at its Estonian subsidiary did not meet its criteria.
Danske Bank has been troubled by a money-laundering issue for approximately five years. In October, the bank said that $1.9 billion will be set aside to address investigations by the Justice Department, SEC, and Danish Special Crime Unit.
Investors also sued Thomas Borgen, the former CEO of Danske Bank, in connection with the incident, but a Danish court exonerated him in November.
A group of investors who lost the lawsuit filed an appeal of the verdict on Monday.
"We offer our unreserved apology and take full responsibility for the unacceptable failures and misconduct of the past, which have no place at Danske Bank today," stated CEO Carsten Egeris.
"We have taken significant learnings from the regrettable failures of the past and our focus has been on systematically addressing the root causes that led to these unacceptable breaches of everything we want to stand for as a bank."
"Our transformative change, both at an operational and at a cultural level, has moved us to a much stronger position today. We are focused on preventing these deeply regrettable failures from ever happening again and delivering on our longer-term strategic objectives with expert advisory services, strong digital solutions and sustainable finance at the core of our business."
By fLEXI tEAM