Round Up: Danske Bank settles AML failings with DOJ, SEC and the Danish Special Crime Unit (SCU)
US Department of Justice (DOJ): Danske Bank Pleads Guilty to Fraud on U.S. Banks in Multi-Billion Dollar Scheme to Access the U.S. Financial System – Largest Bank in Denmark Agrees to Forfeit $2 Billion
Danske Bank A/S (Danske Bank), a global financial institution headquartered in Denmark, pleaded guilty today and agreed to forfeit $2 billion to resolve the United States’ investigation into Danske Bank’s fraud on U.S. banks.
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.
“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,” said Deputy Attorney General Lisa O. Monaco. “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.”… Read the full press release here: https://www.justice.gov/opa/pr/danske-bank-pleads-guilty-fraud-us-banks-multi-billion-dollar-scheme-access-us-financial
Read the complaint here: https://www.justice.gov/opa/press-release/file/1557606/download
Read the plea agreement here: https://www.justice.gov/opa/press-release/file/1557611/download
US Securities and Exchange Commission (SEC): SEC Charges Danske Bank with Fraud for Misleading Investors about Its Anti-Money Laundering Compliance Failures in Estonia – Bank Agrees to Pay More than $400 Million to Settle SEC Charges
The Securities and Exchange Commission today announced fraud charges against Danske Bank, a multinational financial services corporation headquartered in Denmark, for misleading investors about its anti-money laundering (AML) compliance program in its Estonian branch and failing to disclose the risks posed by the program’s significant deficiencies. Danske Bank agreed to pay $413 million to settle the SEC’s charges.
According to the SEC’s complaint, when Danske Bank acquired its Estonian branch in 2007, it knew or should have known that a substantial portion of the branch’s customers were engaging in transactions that had a high risk of involving money laundering; that its internal risk management procedures were inadequate to prevent such activity; and that its AML and Know-Your-Customer procedures were not being followed and did not comply with applicable laws and rules. The SEC alleges that, from 2009 to 2016, these high-risk customers, none of whom were residents of Estonia, utilized Danske Bank’s services to transact billions of dollars in suspicious transactions through the U.S. and other countries, generating as much as 99 percent of the Estonian branch’s profits. The complaint further alleges that, although Danske Bank knew of these high-risk transactions, it made materially misleading statements and omissions in its publicly available reports stating that it complied with its AML obligations and that it had effectively managed its AML risks. As the full extent of Danske Bank’s AML failures became apparent, its share price dropped precipitously.
“Corporations that raise money from the public must disclose information that is material to investors, who then get to decide what risks they want to take. That’s the basic bargain of our securities laws and it extends to foreign issuers like Danske Bank, which sought to access our capital markets, even though its securities were not registered with the Commission,” said Gurbir S. Grewal, Director of the SEC’s Division of Enforcement. “But as alleged in our complaint, Danske Bank repeatedly broke that bargain by misrepresenting to its shareholders, including U.S. investors, that it had strong anti-money laundering controls while hiding its significant control deficiencies and compliance failures.”… Read the full press release here: https://www.sec.gov/news/press-release/2022-220
Danske Bank company announcement: Danske Bank reaches coordinated resolutions with the US and Danish authorities regarding the Estonia matter
Danske Bank has reached resolutions with the DoJ, the SEC and the Danish SCU following the investigations in relation to the non-resident portfolio at Danske Bank’s former Estonia branch.
In relation to the resolutions with the U.S. authorities, Danske Bank has pleaded guilty to a criminal charge from DoJ of conspiracy to commit bank fraud, which has today been approved by a U.S. District Court. Furthermore, Danske Bank has agreed to settle a civil securities fraud action with the SEC.
Under the SCU resolution, Danske Bank has agreed to accept a fine and confiscation for violations of the Danish AML Act and the Danish Financial Business Act.
The aggregate amounts payable to the US and Danish authorities total USD 2.06 billion (~ DKK 15.3 billion – hedged following the provision) and is comprised of forfeiture, fine, disgorgement and confiscation. This is covered by the provisions booked in connection with our financial results for the third quarter of 2022 and the third quarter of 2018. Reflecting cross-crediting arrangements between the three authorities as well as currency conversions, the amounts payable to the authorities are as follows:
- DoJ [US Department of Justice]: USD 1,209 million
- SEC [US Securities and Exchange Commission]: USD 178.6 million
- SCU [Danish Special Crime Unit]: DKK 4,749 million
Danske Bank accepts and agrees to the terms of the resolutions… Read the full press release here: https://danskebank.com/news-and-insights/news-archive/company-announcements/2022/ca13122022
