Danske Bank Pleads Guilty in Multibillion-Dollar Estonia Fraud Scheme

Summary

Danske Bank pleaded guilty in the United States in December 2022 to conspiracy to commit bank fraud after admitting that it misled U.S. banks about its anti-money-laundering controls and the high-risk customers of its former Estonian branch. According to the U.S. Department of Justice, between 2008 and 2016 Danske Bank Estonia processed approximately $160 billion through U.S. banks on behalf of non-resident customers, including customers in Russia and other high-risk jurisdictions. The DOJ said Danske Bank knew by at least February 2014 that some Estonia branch customers were engaging in highly suspicious and potentially criminal transactions. Internal audits and regulators had also raised concerns about the branch's anti-money-laundering controls. Despite these warnings, according to the DOJ, Danske Bank continued allowing the Estonian branch to provide banking services through the U.S. financial system and misrepresented the state of its anti-money-laundering controls to U.S. banks. As part of its guilty plea, Danske Bank agreed to forfeit $2.059 billion as part of coordinated resolutions with authorities in the United States and Denmark. U.S. Department of Justice – Danske Bank pleads guilty to fraud on U.S. banks: https://www.justice.gov/archives/opa/pr/danske-bank-pleads-guilty-fraud-us-banks-multi-billion-dollar-scheme-access-us-financial Danske Bank's own 2018 investigation found that approximately €200 billion in payments flowed through the Estonian branch's Non-Resident Portfolio between 2007 and 2015. Approximately 15,000 customers were included in the investigation. The bank concluded that a significant portion of those customers should have been considered suspicious and acknowledged major deficiencies in governance and controls at the Estonian branch. Danske Bank acknowledged that it had been too slow to react to indications of suspicious activity and that the bank's governance and control systems had failed to ensure that problems at the Estonian branch were properly identified and addressed. Danske Bank – Findings of the investigation into the Estonian branch: https://danskebank.com/news-and-insights/news-archive/press-releases/2018/pr19092018 The case also resulted in major penalties in Denmark. Danske Bank accepted a DKK 3.5 billion fine and approximately DKK 1.25 billion in confiscation in connection with violations relating to the Estonian branch. Danske Bank accepted responsibility for the misconduct and apologized. The bank subsequently closed the Non-Resident Portfolio, exited its banking activities in the Baltic states and implemented extensive changes to its anti-money-laundering, compliance and financial-crime controls. Danske Bank – Final coordinated resolutions concerning Estonia: https://danskebank.com/news-and-insights/news-archive/company-announcements/2022/ca13122022 Key facts: Danske Bank pleaded guilty to conspiracy to commit bank fraud; approximately $160 billion was processed through U.S. banks for the Estonian branch's non-resident customers between 2008 and 2016; Danske Bank's own investigation identified approximately €200 billion in payments through the Non-Resident Portfolio between 2007 and 2015; approximately 15,000 customers were investigated; the DOJ said the bank knew some customers were engaging in highly suspicious and potentially criminal transactions; Danske Bank admitted misleading U.S. banks about the Estonian branch and its AML controls; the U.S. resolution involved $2.059 billion in forfeiture; and the Danish resolution included a DKK 3.5 billion fine plus approximately DKK 1.25 billion in confiscation. The case represents one of the largest money-laundering and financial-crime compliance failures involving a European bank and resulted in Danske Bank formally admitting criminal conduct rather than merely facing allegations.