English version: An overview of the Danske Bank money laundering scandal

Berlingske has been investigating the money laundering at Danske Bank since March 2017. Here is an overview of the case – with links to the most important articles (some are in Danish).

(ARKIV) Ledelsen i Danske Bank har været for slap til at reagere på hvidvask i bankens filial i Estland, mener Finanstilsynet. Hverken direktør eller formånd vil gå af. Det skriver Ritzau, torsdag den 3. maj 2018.. (Foto: Mads Claus Rasmussen/Ritzau Scanpix) Fold sammen
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Foto: Mads Claus Rasmussen
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Updated 19th of March 2019.

For years, large and deeply questionable sums of money flowed unhindered through Danske Bank’s branch in Estonia.

Throughout 2017 and 2018, Berlingske has uncovered, piece by piece, what is now internationally known as one of the biggest money laundering scandals in history.

The case reached its zenith in the autumn of 2018 when Danske Bank presented its own report on the case, compiled by a law firm: the report identified as »suspicious« a »large part« of the €200bn that flowed through the Estonian branch, primarily from so called »non resident« clients in Russia and other former Soviet republics.

The results forced the bank’s CEO, Thomas Borgen to step down.

A few months later in November A.P. Moller Holding A/S dramtically used its roughly 20 percent stake in the bank to force chairman of the board, Ole Andersen, out. He officially stepped down in December.

Below is an overview of how the case has developed, with links to central articles.

You may also view this online narrative on the money-laundering scandal to help you grasp the key issues in the case (in Danish).

Massive money laundering through Danske Bank and Nordea

The first chapter in the money-laundering scandal started in March 2017, when Berlingske joined with the journalism organisation OCCRP, Russian daily Novaya Gazeta and other media outlets to reveal how substantial amounts of money had passed unhindered through Danske Bank Estonia and rival bank Nordea in Copenhagen without these banks verifying the clients and transactions involved as required by international anti-money laundering rules.

Berlingske later uncovered how the same two Danish banks also appeared to have played a role in two spectacular international crime cases involving money laundering and corruption in Russia and Italy.

It further emerged that Danish authorities received a detailed warning as early as 2013 from a British law firm concerning money laundering through these Danish banks.

Dictatorship channelled money through Danske Bank

The next chapter of the money-laundering case began in September 2017, when Berlingske dug deeper into client files from Danske Bank Estonia to reveal that the Azerbaijani regime had used accounts in Danske Bank Estonia to channel money to European politicians and officials, as well as to tax shelters and to pay for luxury consumption.

While other banks – including a small Italian savings bank – flagged and responded to some of these suspicious money transactions, Danske Bank apparently overlooked a whole string of obvious signs of money laundering.

These revelations followed a leak of data to Berlingske which was subsequently shared with OCCRP and a number of other media organisations. The stories that came from the cooperation was dubbed the »Azerbaijani Laundromat«.

The revelations led Danske Bank’s CEO Thomas Borgen to launch a thorough review of the money-laundering scandal in September 2017, as the extent now appeared to be »worse than feared.« As mentioned above, the results made him step down.

French authorities brought preliminary charges against Danske Bank for a direct link to the major Danish Bank’s involvement in money laundering in October 2017. Later its changed Danske Bank's status to witness but then again brought preliminary charges in February 2019.

What did the bank know?

It was subsequently revealed by Berlingske that Danske Bank’s management in both Estonia and Copenhagen had received strong early warnings on suspected money laundering in the Estonian branch – and that the top management in Copenhagen had even been warned by the bank’s own internal auditor that staff at the branch were wittingly and actively hiding shady clients from authorities.

Berlingske also revealed how Thomas Borgen, the Chief Executive of Danske Bank, was briefed on the money-laundering issues at the bank’s Estonian branch at a far earlier stage than he had previously indicated.

Former staff at the Estonian branch also told of having to deal with secrets and threats on a daily basis.

Despite these warnings in both 2013 and 2014, it took the bank more than 18 months to clear out the suspicious clients in Estonia.

Not until late 2015 did the bank finally shut down the problematic portfolio of clients. By then the bank had received a reprimand from Estonian regulators for dragging its feet.

Both the Danish financial regulator, Finanstilsynet, and Danske Bank’s own legal department were aware of suspicious Russian clients at the Estonia branch as early as the beginning of 2012 when the questionable money flows were at their peak.

Links to Putin family and FSB

The case has since also been shown spectacularly to be linked to the power elite in Vladimir Putin’s Russia.

One of the earliest warnings sent to Danske Bank’s top management came in December 2013 from an executive with the bank who alerted the executive board to suspected breaches of anti-money laundering rules in the Estonian branch.

According to this whistleblower, a number of companies with accounts in the branch were allegedly controlled by »the Putin family and the FSB,« the latter being the Russian intelligence service.

The whistleblower’s alert was sent to four highly placed executives in Danske Bank.

Subsequently, the Danish financial regulator also started looking into the case, though only after the head of the regulator, Henrik Ramlau-Hansen, had declared a conflict of interest in the case due to having been a member of Danske Bank’s executive board with direct responsibility for anti-money laundering controls at the time when the suspected breaches occurred.

And while Dansk Bank’s management consistently maintained that the Estonian branch was only »a tiny part« of the bank’s total operations, Berlingske was now able to document that it was actually a money machine.

Banking head exits, regulator reprimands

In April 2018 Lars Mørch resigned as head of Business Banking and International Banking - including the Baltic region – since 2012.

In May 2018 the financial regulator, Finanstilsynet, levelled unprecedented criticism at Danske Bank’s handling of the money-laundering issues.

On the same day that the regulator published its strongly worded criticism of Danske Bank’s money-laundering controls, the regulator’s chairman, Henrik Ramlau-Hansen, also publicly resigned from his post.

The scandal grows; the police step in

In June 2018, Berlingske cooperated with television news programme DR 21Søndag and exposed yet another spectacular case with links to Danske Bank, revealing how the scandal-hit Estonian branch had previously been linked to a shady criminal case in 2009 – this time involving the sale of illegal arms from North Korea.

These new revelations led Rasmus Jarlov, the recently appointed Danish minister for business and growth, to criticise Danske Bank’s handling of the case in very sharp terms.

Berlingske then revealed that the suspicious money flows through Danske Bank’s scandal-hit Estonian branch appeared to be far more extensive than previously estimated.

In July, Estonian authorities opened an investigation into Danske Bank, while the Danish financial fraud unit, Bagmandspolitiet, launched its own investigation in August.

Major repercussions and an avalanche of events

On 19 September, 2018, Danske Bank presented a report compiled by law firm Bruun & Hjejle into the case at an historic press briefing. Across some 90 pages, the findings document a string of breaches and money laundering of astronomical proportions. Thomas Borgen also resigned as Chief Executive.

But the findings still leave a number of questions unanswered, including where all the money that flowed through Danske Bank actually went.

It also remains clear that the money-laundering scandal has reopened old wounds at Danske Bank’s headquarters in central Copenhagen, as the bank’s previous top management now faces further stains on an already badly tarnished reputation.

Following the findings of the law firm’s report, the case has taken an explosive turn of events:

  • U.S. authorities have opened a formal investigation into the case, which may result in heavy fines for Danske Bank. Danske Bank has confirmed that The American Department of Justice as well as the Securities and Exchange Commission (SEC) are investigating. An internal memo obtained by the Financial times has thrown new light on controversial transactions at the Estonian branch which would be of particular interest to U.S. authorities. These involve so-called »mirror trades« which were uncovered by Berlingske as far back as November 2017.
  • The Danske Bank stock dropped 47 percent during 2018, the equivalent of 13 billion euros.
  • At least 20 law firms are internationally planning or already taking Danske Bank to court as a direct consequence of the money laundering scandal. Danish finance website has this overview. 
  • Ten people were arrested in Estonia in December and are being investigated on the suspiscion of helping customers laundering money.

Jesper Nielsen has been interim CEO since October 2018, the new board is searching for the new CEO

More stories from Berlingske’s investigative team are available here (in Danish).

Translation: Bibi Christensen