Danske Bank Pleads Guilty to Fraud in Multi-Billion Dollar Scheme to Access US Banks

Danske Bank, a Denmark-based global financial institution, pleaded guilty earlier this week and will forfeit $2 billion to settle a federal investigation into its fraud against US banks.

According to a press release from the Dept. of Justice (DOJ), Danske Bank defrauded US banks by providing false information about customers of its Estonian branch as well as its anti-money laundering controls. This allowed “high-risk customers,” including Russians, access to the US financial system.

In the press release, Deputy Attorney General Lisa O. Monaco said that the plea and multi-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.”

Monaco’s statement continued: “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.”

According to the DOJ, Danske Bank knowingly allowed billions of dollars to be transferred over an eight-year period from its Estonia branch into accounts in the US and elsewhere. But Danske never obtained adequate anti-money laundering information about the accounts in question. The Estonia branch, prosecutors say, processed as much as $160 billion during that period.

Here’s more from the DOJ:

…Danske Bank Estonia employees conspired with NRP customers to shield the true nature of their transactions, including by using shell companies that obscured actual ownership of the funds. Access to the U.S. financial system via the U.S. banks was critical to Danske Bank and its NRP customers, who relied on access to U.S. banks to process U.S. dollar transactions. Danske Bank Estonia processed $160 billion through U.S. banks on behalf of the NRP.

That’s not all. The US Securities and Exchange Commission (SEC) also announced a settlement with Danske Bank in another proceeding. In that settlement, Danske will pay $413 million. According to the press release, the FBI is still investigating the case.