Danske Bank A/S, the largest bank in Denmark, has pleaded guilty to one count of conspiracy to commit bank fraud in violation of 18 USC § 1349. The charges were announced by the US Attorney’s Office for the Southern District of New York.
The charges stem from the conduct of the bank’s Estonia branch, which was accused in November 2018 by the Danish State Prosecutor for Serious and International Crime with facilitating the laundering of money through non-resident accounts at the bank’s Estonian branch from 2007 to 2015. That investigation was initiated following a whistleblower complaint that led to an internal investigation at the bank and disclosures to local and regional authorities. Danske Bank paid approximately $229 million to establish an independent foundation dedicated to combating international financial crime. The bank also established a comprehensive anti-money laundering program in its Baltic branches, and closed all non-resident accounts in Estonia.
According to court documents, between 2008 and 2016, Danske Bank Estonia processed $160 billion through US banks on behalf of non-resident customers of Danske Bank Estonia. As stated in the court documents, some of these funds were transferred on behalf of customers whose identities were shielded through shell companies, with little oversight on the part of Danske Bank Estonia employees. The DOJ noted that at least since February 2014, Danske Bank knew that some of its non-resident customers’ transactions were highly suspicious; it also knew that the AML compliance program at the Estonia branch did not meet the standards of its parent entity or those of the international banking community. And, according to the DOJ, ”[i]stead of providing the U.S. banks with truthful information, Danske Bank lied about the state of Danske Bank Estonia’s AML compliance program, transaction monitoring capabilities, and information regarding Danske Bank Estonia’s customers and their risk profile.” In a press statement about the settlement, Danske Bank highlighted its cooperation with the authorities during the course of the investigation, adding, “Danske Bank fully accepts the findings and apologises unreservedly for the unacceptable historical failings and misconduct, which have no place at Danske Bank today.”
The global settlement involves authorities in Denmark and the United States. Pursuant to the plea agreement with the DOJ, Danske Bank will pay criminal forfeiture in the amount of $2,059,979,050, of which the DOJ will credit approximately $850 million of payments to the US Securities and Exchange Commission and the Danish Prosecution Service, including a criminal fine and confiscation order of $672,316,404.
The parallel investigation by the SEC resulted in charges that the bank violated the antifraud provisions of the Securities Exchange Act of 1934. Pursuant to its settlement with the SEC, Danske Bank consented to the entry of a final judgment in US District Court for the Southern District of New York permanently enjoining the bank from future violations. The SEC order requires Danske Bank to pay a civil penalty of $178.6 million, an equal amount in disgorgement, and $55.8 million in prejudgment interest. Payment of the disgorgement and prejudgment will be deemed satisfied by the forfeiture and confiscation ordered in the resolution with the DOJ.