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United States V. Danske Bank



 

Case Number: #1:22-cr-00679

Date Filed: December 13, 2022

Court: U.S District Court Southern District of New York

Plaintiff: United States of America

Defendant: Danske Bank A/S


  • Case Information: Danske Bank acquired Finland-based Sampo Bank in 2007, including Sampo Bank’s large operation in Estonia. After purchasing Sampo Bank, Danske Bank continued this operation since it was aware that it was a significant component of Sampo Bank's Estonia business model. The non-resident portfolio (also known as "NRF") was Danske Bank Estonia's most profitable business segment, accounting for 50% of all profits made throughout the term of the bond. Danske Bank used U.S. institutions and bank accounts to handle transactions because it was aware that many NRP clients made payments in USD. By December 2013, Danske Bank was aware that NRP posed a high risk due to the fact that many of its clients lived in high-risk regions, frequently used shell companies to conceal the identity of their ultimate beneficial owners or the sender or recipient of transactions, and conducted shady business through American banks. Danske Bank Estonia had policies and practices that made it possible for NRP customers to open accounts and conduct transactions without the proper due diligence or supervision. These policies and practices included letting representatives open NRP customer accounts from Russia and other nations without sending Danske Bank Estonia account opening paperwork, allowing financial intermediaries like unregulated money services businesses outside of Estonia to open accounts, and opening accounts for representatives of NRP customers. Internal examinations revealed to Danske Bank by at least February 2014 that some NRP customers were involved in very dubious and potentially illegal transactions, including those through the United States. At the same time, Danske Bank was aware that the anti-money laundering ("AML") program and practices used by Danske Bank Estonia did not adhere to their requirements and were not suitable to address the risks associated with the NRP. Customers of Danske Bank NRP made sizable transactions in USD at different U.S. banks, all of which are federally insured financial institutions situated in the Southern District of New York. In order to maintain accounts with the U.S. Banks and U.S. Bank 3 and facilitate the approximately $160 billion in transactions that Danske Bank Estonia facilitated on behalf of its NRP customers between 2007 and 2016, Danske Bank Estonia misrepresented the state of Danske Bank Estonia's AML compliance program, transaction monitoring, and information regarding Danske Bank Estonia's customers and their risk profile.


  • Plaintiff Arguments:

  1. From the time DANSKE BANK purchased Sampo Bank in 2007 through at least December 2013, DANSKE BANK knew that regulators had concerns regarding the NRP and Danske Bank Estonia's business and AML practices. In 2007, the Central Bank of Russia ("CBR") sent a letter to DANSKE BANK that reported Danske Bank Estonia conducted transactions of "doubtful origin" related to customers "offshore and in the UK" that amounted to billions of rubles per month. The CBR explained that, while these transactions looked like payments for goods, those goods never crossed borders, and it was, according to the CBR, "quite obvious that neither the goods nor securities nor services do exist in reality." The CBR can be connected with concluding that "the mentioned transactions are criminal laundering." activity in its pure form, including money.

  2. In a series of emails beginning in December 2013, a Whistleblower, who was a senior employee at Danske Bank Estonia, raised concerns within Danske Bank Estonia and DANSKE BANK that NRP customers were engaged in suspicious providing false account documentation, using shell companies, and potentially engaged in money laundering. The Whistleblower concluded that with respect to the NRP, Danske Bank Estonia "may itself have committed a criminal offense, .. likely breached numerous regulatory requirements." DANSKE BANK also did not disclose the Whistleblower allegations to any government authority or the U.S. Banks until the DFSA requested information pertaining to AML issues in Danske Bank Estonia at the end of 2017, despite the clear identification of suspicious activity within the NRP before that time.

  3. Danske Bank Estonia consistently gave inaccurate and deceptive information about the NRP in response to questions from U.S. BANK 1 throughout their dealings. U.S. BANK 1 visited Danske Bank Estonia for a routine compliance inspection in September 2008 to talk about the NRP and Danske Bank Estonia's compliance measures. Internal notes from U.S. BANK 1 reveal that during those meetings, two Danske Bank Estonia AML employees and a relationship manager misled U.S. BANK 1 about a number of things, including the absence of Danske Bank Estonia representative offices in Moscow, the necessity of face-to-face client meetings in Estonia for all customers opening accounts, the documentation of client operations, and the fact that Danske Bank Estonia forbade clients from using "dormant" UK companies.

  4. Consistent with CRO-1's email, DANSKE BANK approached U.S. BANK 3, where DANSKE BANK had an established relationship, about opening a U.S. dollar account for Danske Bank Estonia. DANSKE BANK misrepresented the reason it was seeking a new account to U.S. BANK 3 and did not inform U.S. BANK 3 of U.S. BANK 1's concerns regarding the NRP. In July 2013, a DANSKE BANK Network Manager ("Group Employee-1"), who knew that U.S. BANK 1 would no longer process NRP transactions and that Danske Bank.

  5. Even after DANSKE BANK delayed in reviewing U.S.BANK 3's request, it deliberately chose to ignore U.S. BANK 3's core request not to route NRP shell payments through U.S. BANK 3, and in fact increased those payments. During this same period, U.S. BANK 2 made the decision to stop processing payments through Danske Bank Estonia's U.S. dollar account. DANSKE BANK decided to reroute NRP U.S. dollar transactions that had previously gone through U.S. BANK 2 to U.S. BANK 3. DANSKE BANK executives conceded. that this arrangement was directly contrary to U.S. BANK 3's noshell request but justified it because they were in the process of shutting down the NRP in its entirety.

  6. As part of its internal investigation, and based on a review of publicly available information, DANSKE BANK determined that Danske Bank Estonia had processed through the U.S. Banks billions of dollars in transactions associated with money laundering and other criminal schemes, including Russian criminal schemes.


  • Laws Cited:

Bank Fraud, 18 U.S.C 1344(2)

21 U.S.C 853 (p)

28 U.S.C 2461 (C)

Money Laundering


  • Defendant Arguments: Defendant pled guilty to Count One of the Information, pursuant to a plea agreement with the Government, wherein the Defendant admitted the forfeiture allegation with respect to Count One of the Information and agreed to forfeit to the United States a sum of money equal to $2,059,979,050 in United States currency, which is 1 property constituting or derived from proceeds obtained directly or indirectly as a result of the commission of the offense charged in Count One of the Information;


  • Case Verdict: Pleaded guilty to count 1. PROBATION: Probation is imposed for the term of the plea agreement, which is three years from the date on which the Information was filed (December 13, 2022), i.e. December 13, 2025. The defendant organization must comply with the standard conditions that have been adopted by this court as well as with any additional conditions on the attached page. Defendant shall comply with all terms of the signed plea agreement, along with any obligations set forth in its signed reporting and compliance agreements. ASSESSMENT: $400.00 due immediately. RESTITUTION: $1,209,062, 646.00. The defendant organization shall make its criminal forfeiture payment to the following payees in the amount listed below. Name of Payee: The United States of America. Special instructions regarding the payment of criminal monetary penalties: Defendant shall forfeit $1,209,062,646 to the United States pursuant to the terms of the plea agreement. Defendant shall make its forfeiture payment by wire transfer pursuant to instructions provided by the Department of Justice and the United States Attorney's Office for the Southern District of New York no later than ten business days after entry of this judgment.


 

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