Danske Bank, in 2022 faced fines of $2 billion for defrauding US banks about the anti-money laundering (AML) controls it implemented in its Estonian Branch from 2007-2016.
An article was published on Danske Bank's failures by Tampa Bay Times and written by Robert Mazur - a federal agent for 27 years and best selling author of the "Infiltrator", a book describing his life in a huge undercover money laundering operation.
Why is this case so serious?
In December 2022 Danske Bank plead guilty to "fraud on U.S. banks in multi-billion dollar scheme to access the U.S. financial system." Danske Bank admitted that among others:
attracted non-resident portfolio customers by ensuring that they could transfer large amounts of money through Danske Bank Estonia with very little, if any, oversight or scrutiny.
employees conspired with their customers to assist them to commit money laundering.
willfully ignored multiple warnings from the Russian and Estonian authorities about suspicious transactions conducted through the Estonian branch.
Additionally, a 608-page civil lawsuit brought in 2022 on behalf of hundreds of US military personnel alleged - among others - that Danske Bank in concert with some other financial institutions:
➡ knowingly facilitated transfers of hundreds of millions of US dollars on behalf of a terrorist syndicate.
➡ knowingly laundered substantial sums for Altaf Khanani who serviced terrorist groups, organized crime outfits and drug cartels.
➡ allowed Khanani launder between $13 and $16 billion per year between 2008-2016.
As a result, Danske Bank is accused for the death of hundreds of people.
Do employees who assisted criminals have personal liability?
According to the article, Danske Bank employees appeared to have had knowledge that the funds moved through the Estonian branch were proceeds of criminal activity. The article raises the following concerns
Maybe they thought that money laundering is a victimless crime?
Maybe they thought that they were simply "doing their job"?
Maybe they thought that they had no personal liability because that was simply part of their duties?
Are penalties the cost of doing business?
In April 2023, six ex-Danske Bank brach staff were convicted for laundering more than $1.6 billion through the Estonian office of Danske Bank.
Additionally, Danske Bank pleaded guilty in December 2022 and agreed to forfeit $2 billion to resolve the United States’ investigation into Danske Bank’s fraud on U.S. banks.
The Bank's reputation suffered, with the share price dropping significantly. The Bank was also forced to redesign its AML program.
AML penalties are not simply a "cost of doing business." While compliance requires resources, failing to meet AML regulations can result in severe financial penalties, reputational damage, and even criminal charges.
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