On Tuesday, Danske Bank, the largest bank in Denmark, pled guilty to conspiracy to commit fraud in the United States and agreed to criminal forfeiture of $2.059 billion under the plea agreement's terms.
The action came as the Danish bank misled US banks by providing falsified information on its Estonia branch's customers and anti-money laundering controls. Thus, high-risk customers of Danske Bank Estonia, who resided outside Estonia, received access to the US banking system.
"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," the Deputy Attorney General, Lisa Monaco said in a statement.
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A Massive Scandal
The money laundering scandal involving Copenhagen-headquartered Danske Bank surfaced in 2018. The bank was accused of laundering around €200 billion.
According to US court documents, the Danish bank offered banking services to non-resident Estonian customers (NRPs) through its Estonia branch. The bank attracted customers by ensuring money transfer services with 'little' oversight. The employees of the Estonia branch were accused of conspiring with the NRPs to use shell companies, concealing the source and ownership of the funds.
Danske Bank and its NRP customers tapped the services of US banks as they needed access to the US banking system to process dollar transactions. It processed at least $160 billion through US banks on behalf of NRP customers.
By at least February 2014, Danske Bank was aware of suspicious transactions of some of its high-risk NRP customers through internal audits, regulatory information and even a whistleblower . However, the Danish bank lied about the state of Estonia's anti-money laundering compliance program, monitoring capabilities and information on high-risk customers to the US banks.
Apart from the $2 billion penalty, the bank will separately pay $413 million to the US Securities and Exchange Commission (SEC) for settling charges of misleading investors about its AML compliance.
"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," said Kenneth Polite, the Assistant Attorney General of the Justice Department's Criminal Division.
