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

The bank has been accused of defrauding US banks by lying about anti-money laundering procedures and high-risk customers who lived outside of Estonia, including Russia.

“Today’s guilty plea and $2 billion fine by Danske Bank demonstrates that the Justice Department will fiercely protect the integrity of the U.S. financial system from tainted foreign money — Russian or otherwise,” said Deputy Attorney General Lisa O. Monaco said in a statement.

“Whether you are a US or foreign bank, if you use the US financial system, you must comply with our laws. We expect companies to invest in robust compliance programs – including at newly acquired or remote subsidiaries – and to accelerate and acknowledge it when it happens,” he said.

Danske acquired the Estonian branch in 2007 and must have known that a “substantial portion” of its customers were involved in activities involving money laundering, the SEC said in its complaint.

The bank must be aware that its own internal risk management procedures are inadequate to prevent it and employees are not following anti-money laundering procedures and complying with laws. This allowed it to make billions of dollars in suspicious transactions in the US and other countries in the period from 2009 to 2016, accounting for 99% of the branch’s profits.

The Justice Department and the SEC said Danske was aware of the transactions but “made substantial misstatements and omissions in his public statements.”

Bank employees conspired with customers of its business to protect the authenticity of their transactions for non-resident customers, including the use of shell companies that disguise ownership of funds. Danske Bank Estonia processed $160 billion through US banks on behalf of the company, according to the statement.

“Danske Bank lied to U.S. banks about its flawed anti-money laundering systems, inadequate transaction monitoring capabilities, and high-risk offshore clients to gain illegal access to the U.S. financial system,” said Assistant Attorney General Kenneth. , Jr. of the Criminal Division of the Department of Justice.

Danske’s US-listed shares were down about 1% in recent trading. In October, the company filed an additional 14 billion crowns ($1.9 billion) in litigation.