Denmark Largest Bank Danske Defrauds US Banks, Forfeits $2bn
According to court documents, Danske Bank defrauded U.S. banks regarding Danske Bank Estonia’s customers and anti-money laundering controls to facilitate access to the U.S. financial system for Danske Bank Estonia’s high-risk customers, who resided outside of Estonia – including in Russia. The Justice Department will credit nearly $850 million in payments that Danske Bank makes to resolve related parallel investigations by other domestic and foreign authorities.
U.S. Attorney Damian Williams said: “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. In doing so, Danske Bank, the largest bank in Denmark, deliberately disregarded U.S. 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 pled 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.”
Deputy Attorney General Lisa O. Monaco said: “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. 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.”
Assistant Attorney General Kenneth A. Polite Jr. 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. Today, Danske Bank accepted responsibility for defrauding U.S. financial institutions and funneling billions of dollars in suspicious and criminal transactions through the United States. 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.”
FBI Assistant Director in Charge Michael J. Driscoll said: “As the guilty plea today demonstrates, Danske knowingly defrauded United States based banks as part of an elaborate scheme to enable money laundering from Russia. Despite knowing that transactions of their customers were suspicious and possibly criminal, Danske initially concealed and lied to the U.S. banks. The FBI and our law enforcement partners are committed to ensuring that foreign financial institutions wishing to do business in our system maintain compliance with the rules and regulations of the United States financial system. Those institutions who try to evade these regulations will be held accountable in the criminal justice system.”
According to admissions and court documents:
Between 2008 and 2016, Danske Bank offered banking services through its branch in Estonia, Danske Bank Estonia. Danske Bank Estonia had a lucrative business line serving non-resident customers known as the NRP. Danske Bank Estonia attracted NRP customers by ensuring that they could transfer large amounts of money through Danske Bank Estonia with little, if any, oversight. 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.
U.S. banks required Danske Bank and Danske Bank Estonia to provide information to open and maintain accounts, including information related to anti-money laundering (“AML”) controls, transaction monitoring, and customers. Danske Bank knew that the U.S. banks expected honest, complete, and accurate responses and that the U.S. banks would not maintain, or open, U.S. dollar accounts for Danske Bank Estonia without the required information.
By at least February 2014, as a result of internal audits, information from regulators, and an internal whistleblower, Danske Bank knew that some NRP customers were engaged in highly suspicious and potentially criminal transactions, including transactions through U.S. banks. Danske Bank also knew that Danske Bank Estonia’s anti-money laundering program and procedures did not meet Danske Bank’s standards and were not appropriate to meet the risks associated with the NRP. Instead of providing the U.S. banks with truthful information, Danske Bank lied about the state of Danske Bank Estonia’s AML compliance program, transaction monitoring capabilities, and information regarding Danske Bank Estonia’s customers and their risk profile.
To resolve the investigation, Danske Bank pled guilty to one count of conspiracy to commit bank fraud. Under the terms of the plea agreement, the company has agreed to criminal forfeiture of $2.059 billion. Danske Bank will also enter into separate criminal or civil resolutions with domestic and foreign authorities, and the Department will credit approximately $850 million in payments the bank makes to the Securities and Exchange Commission (“SEC”) and the Danish authorities.
The Department reached its resolution with Danske Bank based on a number of factors, including the nature, seriousness, and pervasiveness of the offense conduct. This included a bank fraud conspiracy in which Danske Bank misled 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 program and the progress of its remediation; the bank’s resolutions with other domestic and foreign authorities; and the bank’s continued cooperation with the Department’s ongoing investigation.
Danske Bank received full credit for cooperation and remediation because it provided full cooperation with the investigation and demonstrated recognition and affirmative acceptance of responsibility for its criminal conduct, including by, among other things, providing substantial information from its internal investigation, voluntarily and expediently producing a significant amount of documents located outside the United States in ways that did not implicate foreign data privacy laws, making foreign witnesses available for interviews, collecting and producing voluminous evidence and information, including with translations where necessary, and providing detailed analysis of complex, cross-border transactions. Danske Bank has also enhanced and committed to continue improving its compliance programs and has agreed to the appointment of an independent expert selected by its regulator.
Additionally, the SEC announced a separate settlement with Danske Bank today in connection with a related, parallel proceeding. Under the terms of that resolution, Danske Bank agreed to pay approximately $413 million, which includes a civil monetary penalty of $178.6 million, as well as disgorgement that will be credited to any such payments made to the Danish authorities or the department in connection with Danske Bank’s guilty plea.
The case is being handled by the Office’s Money Laundering & Transnational Criminal Enterprises Unit in partnership with the Criminal Division’s Money Laundering and Asset Recovery Section. Assistant U.S. Attorneys Tara M. La Morte and Sheb Swett and Trial Attorneys Margaret A. Moeser and Patrick B. Gushue are prosecuting this case.
Mr. Williams praised the investigative work of the FBI and the significant assistance provided by the Criminal Division’s Office of International Affairs, the SEC, and the authorities in Denmark. Mr. Williams also expressed his gratitude for the assistance provided by authorities in Estonia in response to Mutual Legal Assistance requests.