Danske Bank, Denmark’s largest bank, has been found guilty of defrauding US banks through money laundering, and will pay a $2 billion penalty.
The bank pleaded guilty in the US to one count of conspiracy to commit bank fraud and agreed to pay about $1.2 billion in criminal forfeiture to the US.
It will also pay $672 million to Danish authorities, as well as a civil penalty of roughly $178 million to the US Securities and Exchange Commission.
The $2 billion penalty is the largest forfeiture imposed by the US Department of Justice on a financial institution compared to its market capitalisation.
The DoJ said in a statement Danske had defrauded US lenders in relation to anti-money laundering measures in its Estonia branch, allowing “high-risk customers”, including some from Russia, to access the US financial system.
The move “demonstrate[s] that the Department of Justice will fiercely guard the integrity of the US financial system from tainted foreign money — Russian or otherwise”, Lisa Monaco, US deputy attorney-general, said in a statement.
Danske’s chair, Martin Blessing, said: “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.” The group had “taken the steps necessary” to help prevent similar failures from happening in future, he added.
According to court documents cited by the DoJ, Danske’s Estonia branch attracted foreign customers between 2008 and 2016 by allowing them to transfer large sums of money through it “with little, if any, oversight”.
The DoJ added the branch processed $160 billion through US institutions on behalf of these clients, and conspired with these individuals to mask the real nature of the transactions, sometimes via shell companies.
US authorities said that while the bank knew by at least February 2014 that some of these customers were involved in potentially criminal behaviour, it lied to US banks about the Estonia branch’s anti-money laundering programme.
The SEC also charged Danske with fraud for misleading investors on anti-money laundering compliance shortcomings in the Estonia branch. In 2018 Danske ousted its chief executive and chair after revealing that much of the €200 billion of cash that flowed through its Estonian branch from 2007 and 2015 was suspicious.
While much of the money came from Russia and other ex-Soviet states, the Danish bank has never said how much proved to be actual money laundering.
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