Danske Bank Allowed Millions in Money Laundering

In 2013, the Estonian branch of Danske Bank closed 20 Russian accounts after the Executive Board learned from a whistleblower that those accounts were being used by a family member of Vladimir Putin and the FSB, the Russian intelligence service, to launder an immense sum of money.  However, how Putin’s family and the FSB were connected to the transactions are unknown.

According to a leaked report, Danske likely knew that the money was being laundered which raises questions as to why it took so long for the bank to take action.  Danske started their own official investigation in September of 2017, after their money laundering violations had became public but they are still facing outrage from Danish politicians for the complete failure of their anti-money laundering procedures.

The report which was obtained by Berlinske, a Danish newspaper, states that Lantana Trade LLP reported to UK Companies House that it had yielded a low turnover and would stay dormant.  However, Lantana was moving up to $10 million through Danske Bank accounts which were allowed to stay open for 11 months.  The whistleblower reported that Danske failed to verify who owned the company even though the suspicious transactions were completed just below the compliance control limits.  He also stated that “the activity in the account was in every way indicative of money laundering- many large transactions and all of them done in one or two days- money did not linger.”  In an attempt to determine the owner of Lantana, Danske sent an account manager to Moscow, which only angered the clients and, shortly after, other bank staff were threatened by Russian individuals to be wary when “walking home alone at night.”  Danske consequently closed the 20 accounts, including Lantana and a few others who were involved in the Deutsche Bank scandal.

Danske opened an internal investigation after the transfers were successfully made and discovered that the owners were using offshore management companies located in Seychelles and the Marshall Islands, and have been previously linked to other Russian Banks, including Promsberbank that has been shut down.  Promsberbank went under after losing their license in 2015 and finally collapsed after $3 billion roubles vanished from accounts in 2016.  Igor Putin, cousin of Vladimir Putin and former board member of Promsberbank and Russian Land Bank, was involved in the Russian Laundromat scheme involving $20.8 billion being laundered out of Russia.  Alexander Grigoriev, a banker connected to the FSB and directly involved in the Russian Laundromat, was arrested for money laundering in 2016.  Alexei Kulikov, another Promsberbank shareholder was arrested for fraud in 2015.  Putin, Grigoriev, and Kulikov were all connected to a $10 billion mirror trade scheme at Deutsche Bank where clients could convert roubles into USD.

Previous inspections conducted by Estonian regulators in 2014 discovered that Danske had violated many anti-money laundering regulations in the past.  Last week on February 27, Estonian prosecutors announced they will start their own investigation to determine if Danske failed to report the money laundering connected to Russian politicians and the FSB.  Estonia’s watchdog also suspects that Danske may have been deceiving Baltic authorities.

Danske acknowledged in a statement that “On the basis of what we know, we should have done this faster. Today, we have a very different and stronger control setup in Estonia.”  Danske has also confirmed that they have closed the accounts at issue and are not stating anything further until the investigation is complete.


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