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: Danske Bank to pay $2 billion to settle money-laundering charges at Estonia branch with DOJ and SEC

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Danske Bank A/S on Tuesday pleaded guilty to charges of money laundering at its Estonian branch and agreed to forfeit $2 billion to settle a U.S. investigation of the fraud on U.S. banks, the Justice Department said in a statement.

The Danish lender
DANSKE,
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DNKEY,
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 will pay $413 million to the Securities and Exchange Commission and make another payment to the Danish authorities, said the statement and an earlier SEC release.

The bank is accused of defrauding U.S. banks by lying about its anti money-laundering processes and high-risk customers all of whom lived outside Estonia, including in Russia.

“Today’s guilty plea by Danske Bank and two-billion-dollar penalty demonstrate that the Department of Justice will fiercely guard the integrity of the U.S. financial system from tainted foreign money — Russian or otherwise,” said Deputy Attorney General Lisa O. Monaco in a statement.

“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,” she said.

Danske acquired the Estonian branch in 2007, and should have known a “substantial portion” of its customers were engaged in activities that were highly likely to involve money laundering, the SEC said in its complaint.

The bank should further have known its own internal risk management procedures were inadequate to prevent it and that staff were not following anti-money-laundering processes and complying with laws. That allowed them to transact billions of dollars in suspicious transactions in the U.S. and other countries in the period stretching from 2009 to 2016 that accounted for 99% of the branch’s profit.

The Justice Department and SEC said that Danske knew of the transactions, but made “materially misleading statements and omissions in its public reporting. “

Bank staff conspired with customers of its business serving nonresident clients to shield the true nature of their transactions, including via the use of shell companies that hid ownership of the funds. Danske Bank Estonia processed $160 billion through U.S. banks on behalf of that business, said the statement.

“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,” said Assistant Attorney General Kenneth A. Polite, Jr. of the Justice Department’s Criminal Division. 

Danske’s U.S.-listed shares were down about 1% in recent trade. The company booked an additional provision of 14 billion kronor ($1.9 billion) relating to the matter in October. 

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