Danske Bank says US probing money laundering claims

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Danske Bank says US probing money laundering claims


Danske Bank said it was being investigated by the US Department of Justice over possible money laundering related to more than $200 billion transferred through the Danish lender's Estonian branch
Danske Bank said Thursday it was being investigated by the US Department of Justice over possible money laundering related to more than $200 billion transferred through the Danish lender's Estonian branch.

Denmark's largest lender is at the centre of a storm of controversy and several inquiries after it said "a large part" of transactions totalling 200 billion euros ($235 billion) at its Estonian branch between 2007 and 2015 were "suspicious".

"Danske Bank has also now received requests for information from the US Department of Justice (DOJ) in connection with a criminal investigation relating to the bank's Estonian branch conducted by the DOJ," the bank said.

"We are cooperating with the authorities investigating us as a result of the case. However, it is too early to speculate on any outcome of the investigations," interim CEO Jesper Nielsen said in a statement.

Described by commentators as "the biggest money laundering scandal in Europe," the case shook the Nordic nation's banking sector and forced Danske's chief executive to resign.

Danske Bank -- whose shares were down by almost four percent on the Copenhagen Stock Exchange in afternoon trading on Thursday -- might face US fines, the Danish business daily Borsen said.

"The US authorities have historically slapped heavy fines related to these types of cases so the likelihood of a fine has increased significantly," Mikkel Emil Jensen, analyst at the Danish Sydbank, told AFP.

The announcement comes nearly two weeks after the European Commission called on the European Banking Authority (EBA), a regulatory authority, to probe what happened to the monitoring of Danske's Estonian office.

Britain's National Crime Agency is also probing the activities of UK-based companies with alleged links to the scandal.

- Money from Russia -

In early August, the Danish state prosecutor's office for serious economic and international crime said it too was probing allegations that money, mostly from Russia and other former Soviet republics, which had flowed through the Estonian branch had been laundered.

The allegations are linked to a fraud case exposed by Russian lawyer Sergei Magnitsky, who was jailed after he revealed the involvement of high-ranking Russian officials in stealing massive tax payments from several companies, including the investment fund Hermitage Capital.

Magnitsky died in 2009 aged 37 after being held in a Russian jail for a year, where he was denied medical care.

The whistleblower who unveiled alleged money laundering at Danske Bank's Estonian branch came forward last month: British national Howard Wilkinson, who headed the lender's market business in the Baltics between 2007 and 2014.

He described how the Estonian branch handled customers associated with top Russian politicians and companies based in Denmark, according to Danish daily Berlingske, which broke the story last year.

The bank was warned for the first time in 2007, but only began to react in 2013, when Wilkinson wrote a report to the management, the paper said.

Since early this year, Danske Bank shares have lost roughly one third of their value.
https://sg.news.yahoo.com/danske-bank-s ... 59735.html

Donald and Ivanka Trump’s phony Baku Azerbaijan hotel was front for Iranian money laundering

Shortly after taking office, Donald Trump abandoned a bizarre hotel project in Azerbaijan which never made any sense to begin with. It was built in an industrial part of town where a hotel wouldn’t be needed. The roads being built to the hotel didn’t even lead to it. And now it turns out the entire hotel project appears to have been little more than an excuse to illegally launder money coming from the Iranian Revolutionary Guard.

The Trump International Hotel & Tower Baku project was spearheaded by Donald Trump’s daughter Ivanka Trump, who repeatedly visited the property and posted photos of herself touring it, even though as best anyone can tell the hotel was never going to open or do any business. It appears in hindsight that Ivanka had merely been doing all of this in order to create the outward appearance that the hotel was a legitimate project.

But as it turns out, the hotel deal had been struck with Ziya Mammadov, the corrupt Transportation Minister of Azerbaijan, who has a history of arranging shady real estate projects as money laundering fronts. Mammadov and his family have deep financial connections to the Iranian Revolutionary Guard, making it almost certain that the Trumps were knowingly and illegally doing business with Iran. It also seems likely that Trump shuttered the project upon taking office in the hope it wouldn’t be investigated.

Based on established precedent explained this evening on the Rachael Maddow show, the legal responsibility falls on U.S. citizens to be aware of which foreigners they’re doing business with. So even if Donald and Ivanka Trump try to claim ignorance in this instance, it wouldn’t legally get them off the hook. This new revelation comes from The New Yorker today. It may explain why Senator Sherrod Brown asked the U.S. Treasury late last week to investigate the legality of Trump’s foreign financial connections.
http://www.palmerreport.com/politics/az ... iran/1812/

Other deals Trump has said he has ended, but are still noteworthy
Until recently, Trump had a deal with the son of Azerbaijan’s transportation minister

Trump Entities Foreign Entities Foreign Power

Trump Donald J. Trump has ownership in a holding company called THC Baku Services LLC, which was incorporated on December, 10, 2014 in Delaware.

That company has ownership in a holding company called THC Baku Services Member Corp. Tap icon which has a management deal with a company in Azerbaijan called Baku-XXI Century LLC. Mammadov That company is run by Anar Mammadov Z mammadov who is the son of Ziya Mammadov, the transportation minister of the Republic of Azerbaijan.
Ivanka azerbaijan 420
In 2015, Trump brokered a licensing deal for a luxury hotel tower in Baku with the son of the Azerbaijan’s transportation minister, Ziya Mammadov. The younger Mammadov, Anar, is viewed by Western intelligence services and analysts as a proxy for his father and the Azerbaijani ruling elite.

Leaked State Department cables described the elder Mammadov as "notoriously corrupt, even for Azerbaijan" and accused him of involvement in highway contracts awarded to a former senior Iranian military official in the Republican Guard. "We assume Mammadov is a silent partner in these contracts," a cable said.

“If you did your due diligence, you’d learn that the minister of transport was one of the more corrupt public officials in Azerbaijan and his son was only in business because of his father,” Richard Kauzlarich, a former ambassador to Azerbaijan, told ProPublica.

The Baku-Trump hotel was not completed, but Trump earned more than $2.8 million in hotel management fees between 2015 and 2016, according to federal financial disclosures.

Trump Organization officials told ProPublica in a statement that the project was plagued with delays for more than a year, prompting Trump to end his “association with this project and reallocate our resources.” (Full statement here.) The Mammadovs did not respond to requests for comment.

https://projects.propublica.org/trump-conflicts/

Trump Hotel in Baku Partnered With ‘Notoriously Corrupt’ Oligarch Family With Ties to Iranian Revolutionary Guard Corps
BY ROBBIE GRAMERMARCH 6, 2017 - 2:28

Trump Hotel in Baku Partnered With ‘Notoriously Corrupt’ Oligarch Family With Ties to Iranian Revolutionary Guard Corps

Conflicts of interest have been a permanent fixture of Donald Trump’s campaign and presidency. But a new report from the New Yorker shines a damning spotlight on one of Trump’s most ethically hazy deals, and one that may leave the Trump Organization open to federal prosecution: The Trump Organization’s work to build and manage a hotel in Azerbaijan in partnership with corrupt oligarchs, themselves apparently linked to individuals tight with the Iranian Revolutionary Guard Corps.

To build the Trump International Hotel & Tower Baku — a project conceived in 2008, and nearly finished, but never opened to the public — the Trump Organization worked with the family of Azerbaijan’s transportation minister and a powerful oligarch, Ziya Mammadov. The project has plenty of problems — it’s in the wrong part of town, and can’t compete with existing high-end hotels there — but seems likely to have fallen prey to the notoriously lax local ethics for business dealings.

Adam Davidson describes in great detail in his investigative report how Mammadov was known as “notoriously corrupt even for Azerbaijan,” in a U.S. diplomatic cable leaked by WikiLeaks years ago. He and his family also have close ties to a prominent Iranian business family, the Darvishis, whose members headed Revolutionary Guard-controlled firms that the U.S. government accused of sponsoring terrorism abroad and engaging in illicit activity including drug trafficking and money laundering.

With the Baku hotel deal, the Trump Organization may have violated federal corruption laws, including the Foreign Corrupt Practices Act (FCPA), the New Yorker notes. The heart of the problem seems to be little due diligence before Trump jumped into the project, even though the country is known for being corrupt, his partners were billionaires on a $12,000-a-year-government salary, and corrupt practices were so commonly talked about they litter the State Department cables released by WikiLeaks and featured prominently in a 2014 Foreign Policy piece, “The Corleones of the Caspian.”

“The entire Baku deal is a giant red flag — the direct involvement of foreign government officials and their relatives in Azerbaijan with ties to the Iranian Revolutionary Guard. Corruption warning signs are rarely more obvious,” Jessica Tillipman, an FCPA expert and assistant dean at George Washington University Law School, told the New Yorker.

“The Trump Organization’s Baku project shows the lack of ‘extreme vetting’ Mr. Trump applied to his own business dealings in corruption-plagued regimes around the globe…. Congress — and the Trump Administration itself — has a duty to examine whether the President or his family is exposed to terrorist financing, sanctions, money laundering, and other imprudent associations through their business holdings and connections,” Sen. Sherrod Brown (D-Ohio) said in an email to New Yorker.

The Baku hotel isn’t of course the only conflict of interest Trump faces with his sprawling business empire that spans over 20 countries. He pledged to divest himself from his business, ceding oversight of day-to-day operations to his sons Don Jr. and Eric, but retains financial interest in the company. But ethics experts, including the Office of Government Ethics director Walter Shaub, said Trump wasn’t doing enough to divest his business interests while serving as president. Critics fear Trump could weigh his company’s profits in making policy.

People pay a $200,000 initiation fee to join the Trump-owned Florida Mar-a-Lago resort, and rub elbows with top Trump officials and cabinet members as he installs the White House there every weekend thanks to taxpayer largesse. (Lucky club members can watch real-time national security briefings on an open-air terrace.)

Foreign diplomats are flocking to stay at Trump Hotel in Washington, D.C. Several administration officials, including Treasury Secretary Steven Mnuchin, even live there during the week, feeding more money to the Trump brand. The Trump Organization pledged to scrap foreign business dealings in January, but it it’s already violating that deal. Eric Trump flew to Uruguay in January for a business trip that cost the taxpayers nearly $100,000 in security. And Don Jr. was likely paid at least $50,000 to speak at an event in France, an event organized by friends of the Russian government.

American taxpayers aren’t the only ones shouldering the cost of Trump’s business empire. According to the New Yorker, the Azerbaijani government forcibly evicted 30 families from their homes in 2011 to build a project of “crucial government significance.” That project was the still-never-opened Trump Hotel.

http://foreignpolicy.com/2017/03/06/tru ... -mammadov/

The Sporting Corleones of the Caspian
viewtopic.php?f=8&t=40534&p=638322&hilit=Azerbaijan’#p638322

According to The Guardian, The Trump Organization’s business partner on the phony hotel, Anar Mammadov, has been caught up in the Russian money laundering scheme that was being randomly funneled through Scotland to try to avoid suspicion. Mammadov and Ivanka Trump were so closely connected on the phony hotel scam that at one point he posted a photo of the two of them on Instagram, referring to her as his “dear friend.”




anarmammadov
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Congratulations my dear friend to you and to your family on this historic day!

anarmammadovCongratulations my dear friend to you and to your family on this historic day![/quote]

UK at centre of secret $3bn Azerbaijani money laundering and lobbying scheme
Exclusive: Leaked data reveals thousands of covert payments, including to European politicians and journalists
Mehriban and Ilham Aliyev
Some of the money went towards an international lobbying operation to deflect criticism of Azerbaijan’s president, Ilham Aliyev, pictured with his wife Mehriban outside 10 Downing Street. Photograph: Luke MacGregor/Reuters

Luke Harding, Caelainn Barr and Dina Nagapetyants
Monday 4 September 2017 13.00 EDT Last modified on Monday 4 September 2017 17.00 EDT
Azerbaijan’s ruling elite operated a secret $2.9bn (£2.2bn) scheme to pay prominent Europeans, buy luxury goods and launder money through a network of opaque British companies, an investigation by the Guardian reveals.

Leaked data shows that the Azerbaijani leadership, accused of serial human rights abuses, systemic corruption and rigging elections, made more than 16,000 covert payments from 2012 to 2014.

Some of this money went to politicians and journalists, as part of an international lobbying operation to deflect criticism of Azerbaijan’s president, Ilham Aliyev, and to promote a positive image of his oil-rich country. There is no suggestion that all the recipients were aware of the original source of the money. It arrived via a disguised route.

Analysis The Scottish firms that let money flow from Azerbaijan to the UK
Billions of pounds came through two Glasgow-based companies using obscure structure that let owners hide identities

But the revelations once again highlight the use of the lightly regulated British corporate landscape to move large sums of money around, beyond the purview of regulators and tax authorities. Seven million pounds was spent in Britain on luxury goods and private school fees.

The cash, contributed by an opaque array of paymasters in Azerbaijan and Russia, travelled to the British companies – all limited partnerships registered at Companies House in London – via the western financial system without raising red flags. One of Europe’s leading banks, Danske, processed the payments via its branch office in Estonia.

Danske Bank said “money laundering and other illegal practices” had taken place. It first noticed the irregular payments in 2014. Estonia’s financial regulator said systems designed to stop money laundering at the branch had failed.


The scheme has been nicknamed the Azerbaijtani Laundroma. Confidential banking records were leaked to the Danish newspaper Berlingske and shared with the Organized Crime and Corruption Reporting Project (OCCRP), the Guardian, and other media partners. The data covers a 30-month period. It may show the tip of an iceberg.

The politicians
The leaked bank records show multiple payments to several former members of the Council of Europe’s parliamentary assembly, Pace. One is Eduard Lintner, a German ex-MP and member of the Christian Social Union, the Bavarian sister party to Angela Merkel’s ruling Christian Democrats. Another is the Italian former chair of the centre-right group in Pace, Luca Volontè.

The payments came at a time when Azerbaijan was under fire for arresting human rights activists and journalists, and for holding rigged elections. The regime sought to blunt criticism from Europe and the US by allegedly bribing delegates in what has been called “caviar diplomacy”.

This intensive lobbying operation was so successful that Council of Europe members voted against a 2013 report critical of Azerbaijan.


Everything you need to know about the Azerbaijani Laundromat

Lintner stood down as an MP in 2010, but remained a firm supporter of Azerbaijan. He founded the Society for the Promotion of German-Azerbaijani Relations in Berlin, which received €819,500 (£755,000). One €61,000 payment was made two weeks after Lintner returned to Berlin from a trip to Azerbaijan where he monitored the country’s 2013 presidential election. He said the poll was up to “German standards” – in direct contrast to official election observers who found “significant problems”.

Lintner says he received the money for his society, did not personally benefit, and was not an MP or Council of Europe member at the time. An Azerbaijani NGO paid for his election trip, he says. He says he has no knowledge of the original source of the payments received.

Luca Volontè.

Luca Volontè. Photograph: Vano Shlamov/AFP/Getty Images
Details of cash given to Volontè emerged in 2016 and caused outrage. He received more than €2m in instalments via his Italian-based Novae Terrae foundation. Prosecutors in Milan have indicted him for money laundering and corruption.

Volontè denies wrongdoing. He is seeking to have the case thrown out.

The data also shows money being paid via the British companies to Kalin Mitrev, a Bulgarian appointed last year to the board of the London-based European Bank for Reconstruction and Development. Mitrev received at least €425,000 for private consulting work from a local Azeri company, Avuar Co. He acknowledges the payments and says they were for legitimate business consultancy. He denies all knowledge of the conduit used to execute them or the original source of the funds.

“All the income, generated by activities in different countries, was duly reported and taxed in my country of residence, Bulgaria,” Mitrev said. His consultancy work stopped when he joined the London bank, he said.

The revelation that her husband consulted for an Azeri company might prove awkward for Mitrev’s wife, Irina Bokova, who is the director general of Unesco. Bokova has bestowed one of Unesco’s highest honours, the Mozart Medal on Azerbaijan’s first lady and vice-president, Mehriban Aliyeva. She also hosted a photo exhibition at Unesco’s headquarters in Paris, entitled Azerbaijan – A Land of Tolerance. The Heydar Aliyev foundation organised the event.


Asked by the Guardian whether there was a conflict between her husband’s work and her UN role, she strongly denied this, saying she had no knowledge of her husband’s business affairs. “As a director general of a UN agency, my duty is to develop sound working relations with all members of the organisation in conformity with the policies set by member states. Azerbaijan is not an exception in this respect.”

“I am immensely proud of my determined pursuit of the mandate of Unesco, including in the area of human rights, freedom of expression and the safety of journalists.”

The lobbyists
Large sums from the scheme were spent on lobbying. In 2014 Eckart Sager, a former CNN producer based in London, received nearly €2m from the British companies. His PR company is linked to articles that promote the Azerbaijani government and its views. One piece denies wrongdoing by Baku in the Volontè case. Sager did not comment.

Another beneficiary is a London-based Azeri, Jovdat Guliyev, who received 25 payments totalling almost £400,000. Guliyev is a member of the Anglo-Azerbaijani Society, a lobby group co-chaired by the Liberal Democrat peer Lord German. Guliyev did not respond to repeated messages asking him for a comment.

The British connection
The four firms at the centre of the Azerbaijani Laundromat were all limited partnerships registered in the UK. They were: Metastar Invest, based at a service address in Birmingham; Hilux Services and Polux Management, set up in Glasgow; and LCM Alliance, from Potters Bar, Hertfordshire. Their corporate “partners” are anonymous tax haven entities based in the British Virgin Islands, Seychelles and Belize.

Glasgow, where two of the four firms at the centre of the Azerbaijani Laundromat were set up.


L Burke Files, an international financial investigator, said these company structures were “purposefully opaque”. Foreign criminals used Scottish limited partnerships, or SLPs, he said. In June the government announced SLPs would have to name their significant owners, or pay fines, amid evidence of growing fraud.

“No one suspects Scotland. It’s never been on the Financial Action Task Force (FATF) list of non-compliant countries,” Files said. “If you are going to launder money it’s probably best not to run it between Russia, Malta and the Cayman Islands. Does Scotland raise a red flag in your mind? No.”

All four British companies are named as payment channels in the Italian prosecution case against Volontè. They have since been dissolved.

Luxury services
The banking data shows that the Azerbaijani fund was used for a wide variety of purposes. More than $2.9bn went to companies, with about $50m paid out to individuals. Many beneficiaries were retail and service firms in western Europe. In all probability, they would have been unaware of the origins of the payments they were receiving.

Some of the 200 money transfers to the UK concerned education. In 2014 £89,800 was transferred to Queen Ethelburga’s Collegiate, a private boarding school in York. The school would not identify the pupil or pupils involved or comment.


There were payments to the tuition college Bellerbys and to the ICS international school in London. Bellerbys said it was investigating. The data suggests there were a number of relatively modest bursaries to regime-connected Azerbaijani students studying in Britain, as well as rental deposits on upmarket London flats. Other purchases included designer dresses, luxury cars and legal fees. There is no suggestion the UK recipients should have known about the provenance of the money.

Azerbaijan’s ruling family is not directly named. But the evidence of a connection is overwhelming. Large sums come via the state-owned International Bank of Azerbaijan. This is the largest bank in an oil-wealthy country, and yet earlier this summer it filed for bankruptcy protection in New York. The defence and emergency situations ministries in Baku all chip in cash.

The scheme was used to pay for the government’s incidental expenses including the medical bills of Yaqub Eyyubov, Azerbaijan’s first deputy prime minister. There were separate payments to Eyyubov’s son Emin, Azerbaijan’s EU ambassador, and to the president’s press secretary, Azer Gasimov.

Business partners of the US president, Donald Trump, in a project to build a luxury Trump Tower in Baku also appear in the Laundromat scheme.

The hotel’s local developer was Anar Mammadov, the billionaire son of Azerbaijan’s ex-transport minister Ziya Mammadov. At the time the scheme operated, the Mammadovs were one of the country’s most powerful and wealthy families. The Mammadovs’ Baghlan holding company is linked to Laundromat transactions.


Anar Mammadov posts a picture of himself with Ivanka Trump after her father’s US election win
In 2012 the Trump Organisation signed a deal with the Mammadovs to build a 33-floor, 130-metre-high “ultra-modern” skyscraper. In October 2014 Ivanka Trump toured Trump Tower Baku, posting photos of the unfinished building on her Instagram account. The hotel never opened. Trump has since cut his connection with the project. The Laundromat scheme does not link to Trump but raises questions about his choice of business partners.

The paymasters
It is not entirely clear where the money used in the scheme comes from. The Russian government paid $29.4m into the Laundromat via its main weapons company, Rosoboronexport. Several transactions link to another $20bn money-laundering scheme, which operated out of Moscow between 2010 and 2014. The scheme, the Global Laundromat, was exposed in March by the OCCRP, Novaya Gazeta and the Guardian.

A mysterious private firm in Baku, Baktelekom MMC, pays in more than $1.4bn. The firm is what fraud experts call a doppelganger entity. It sounds like the state telecoms firm with the same name but bears no relation to it. It doesn’t have a website. Its function is unclear. According to the OCCRP, Baktelekom MMC is linked to Mehriban Aliyeva. In January the company was let off a $17.4m tax bill.

The Danish bank Danske said it had not been good enough at monitoring suspicious transactions at its Estonian branch. The bank has since “tightened procedures and controls” and “terminated relationships” with some customers.

“We will not accept Danske being exploited for money laundering or other criminal purposes. We will do everything to prevent it from happening again,” it said.

Madis Reimand, the head of Estonia’s financial intelligence unit, said his office had come across the suspicious Azerbaijani cash flows in 2013 while analysing a separate case. “From there we followed the tracks,” he said. “We tried to cooperate with the source country in order to ascertain where the money came from. This, however, didn’t work out.”

Reimand said Estonia’s financial supervisory authority had identified what had gone wrong and taken steps to prevent similar fraud in the future.
https://www.theguardian.com/world/2017/ ... ing-scheme

[seemslikeadream]

Danske Bank memo shows how Russians moved money

‘Highly profitable’ mirror trades were used by clients to shift money out of country

Mirror trades, which involve Russian clients buying securities in roubles then selling identical ones for foreign currencies such as US dollars, are legal but a red flag for prosecutors of money laundering © Reuters

Richard Milne in Oslo and Caroline Binham in London YESTERDAY Print this page44
Danske Bank executed up to €8.5bn of controversial “mirror trades” for Russian customers in a single year, according to an internal memo that provides new insight into the scale and tactics behind its €200bn money-laundering scandal.

The memo underscores how the “highly profitable” strategy was risky, not least because Danske’s bankers did not know the identity of the end customers, and would not be out of place as a tipsheet for how to move large amounts of money out of Russia.

Mirror trades, which involve Russian clients buying securities in roubles then selling identical ones for foreign currencies such as US dollars, are legal but a red flag for prosecutors of money laundering.

After the Financial Times published details of the scheme on Friday morning, shares in Danske fell as much as 10 per cent to DKr144.30 before paring losses in afternoon trading. They have fallen 43 per cent since the scandal was made public 8 months ago.

The Danske memo, seen by the FT, estimated that Danske made €10m in 2013 from the mirror trades, which used Russian government bonds to allow customers to make international payments in a “faster, cheaper and more reliable way”.

“There is potential reputational risk in being seen to be assisting ‘capital flight’ from Russia,” the memo said, before adding: “This is anyway a risk we run in other parts of our non-resident business, where the natural currency flow is always out of Russia. [ . . .] Given the strong income from the solution, the risk-return is seen as very attractive.”

The scale of the mirror trading heaps yet more pressure on Danske and its management in a scandal that has already cost the job of the bank’s chief executive, Thomas Borgen, and triggered investigations in at least six countries, including by the United States Department of Justice, after the bank conceded €200bn in Russian and other money had flowed through its small Estonian branch.

Danske declined to comment. While the memo seen by the FT is undated, Danske’s report into the scandal refers to a memo with similar language circulated in October 2013.

This bank report said the trades were used for 10 customers that were in turn intermediaries for other customers, about whom Danske did not have “full knowledge”. The report added that an earlier draft of the memo included a reference to money-laundering risks, which was then left out of the final version.

The memo did add that risks could be mitigated by only allowing trades where there was supporting documentation that they were for payment of goods and services, and by restricting the daily volumes.

Crime agency investigates UK entity linked to Danske Bank

The estimate for the amount of mirror trades at Danske comes from FT calculations. The memo said 60 per cent of its revenue, or €6m, came from charging a 0.07-0.1 per cent brokerage fee, implying a range for 2013 of €6bn-€8.5bn in mirror trades.

It is not known how much was transacted in other years but the memo noted that “the solution is likely to be temporary, as at some point regulations in Russia are likely to change so as to bring this solution within existing currency control regulations”.

That came to pass, after controls were introduced in the wake of western sanctions.

US authorities, who have opened a criminal investigation into Danske, have taken interest in mirror trades before: Deutsche Bank landed a $630m penalty from US and UK authorities for using the trades to allegedly launder $10bn out of its Moscow office between 2011 and early 2015.

Deutsche was one of the correspondent banks for Danske’s Estonian branch’s dollar transactions but terminated the relationship in 2015 due to concerns about the number of suspicious clients.

Berlingske, the Danish newspaper, has reported that several intermediaries with which Deutsche executed its mirror trades were also clients of Danske’s Estonian branch, including one called IC Financial Bridge. That is the company whose major shareholder was Alexander Perepilichny, the Russian businessman-turned-whistleblower who died in 2012 while out jogging near his home in a wealthy Surrey neighbourhood south of London.

The memo was written by two former bankers from the Estonian branch, Juri Kidjajev and Howard Wilkinson, to the branch’s executive committee.

Mr Wilkinson, Danske’s head of markets in Estonia, later wrote several emails to the bank’s management in Copenhagen, claiming whistleblower status and complaining of money-laundering problems in the branch.

He accused Danske of dealing with a limited liability partnership registered in the UK but whose ultimate owners included a member of the family of Vladimir Putin, the Russian president, as well as Russian intelligence services. The Kremlin has denied any links between Mr Putin and Danske.

Danske: anatomy of a money laundering scandal

Stephen Kohn, Mr Wilkinson’s US-based lawyer, said his client had not seen the final version of the memo and that in an earlier draft he had made clear that he was only responsible for the markets analysis, not the anti-laundering or customer aspects of the trade.

“Specifically, Mr Wilkinson included wording which was deleted in the final version of the memo cited in the bank’s report. That language included the following: ‘and therefore potentially this solution could be used for money laundering.’ He never saw the final memo, and did not participate in the meeting for which it was discussed.”

Mr Kidjajev confirmed that he “participated in writing the memo” and referred other queries to Danske.

Graham Barrow, an independent consultant and former regulator, said the memo contains “elements which, as an anti-money-laundering expert, are troubling. The lack of reliable facts on the ultimate source of funds is one, and the slightly cavalier approach to identification of the end clients and the destination of the funds is another.”

The mirror trades were dubbed internally at the lender as “the solution” or the “bond loop”. They worked by a customer paying roubles to an intermediary, who then bought Russian government bonds that were transferred to Danske’s account at Citi in Moscow. The intermediary then sold the bonds to Danske, who in turn credited the intermediary’s account immediately. The intermediary then paid the customer’s supplier.

The bond loop was investigated by the bank in early 2014, along with Mr Wilkinson’s allegations. Internal emails seen by the FT from that year indicate growing alarm at the scheme, and a realisation that “any ‘reliance’ that could be placed on these intermediaries for identification / verification is questionable.”

Separately, Denmark’s business authority, a government agency, said it had opened an investigation into accountant EY’s audit of Danske in 2014. The authority declined to comment on why it was focusing on 2014. It is also investigating whether Danske’s auditors — which for the time period included Deloitte, EY, KPMG, PwC and Grant Thornton — fulfilled their anti-money laundering duties up to 2015.
https://www.ft.com/content/f13ae77a-c7f ... 390057b8c9

[seemslikeadream]

Corruption Currents: Danske Bank Whistleblower Cleared to Testify Before European Parliament

Samuel Rubenfeld
Oct 31, 2018 3:02 pm ET

A general view of the Danske Bank Estonian branch in Tallinn, on Aug. 3, 2018.

By
Samuel Rubenfeld
A daily roundup of corruption news from across the web. We also provide a daily roundup of important risk & compliance stories via our daily newsletter, The Morning Risk Report, which readers can sign up for here. Follow us on Twitter at @WSJRisk.

Bribery

Indonesia arrested seven people, including a senior palm oil company executive, in a bribery probe. Separately, an Indonesian governor pleaded guilty to bribery and the chief executive of conglomerate Lippo Group faces questioning in a bribery case related to a real-estate project. (Reuters, EcoBusiness, JP, JP, Reuters)

Hearings began in the case of alleged bribery and fraud by engineering giant SNC-Lavalin Group. (G&M)

U.S. authorities want documents from Glencore PLC about its use of intermediaries as an FCPA probe continues. (OCCRP)

The feud at the top of India's anticorruption agency continues. Most bribery-related complaints received by Indian authorities concern the police and revenue departments. (UNI, NT, Scroll, TOI, NIE, TOI)

Local cases: Three more city leaders in South Texas were sent to prison for bribery. (AP, KWTX)

Cybercrime

Maria Butina, a suspected Russian spy, worked on a sensitive project concerning cybersecurity while as a student at American University. (AP)

U.S. election security depends on firms plagued by security challenges. (AP)

Money Laundering

Pakistan's "penniless billionaires" have long been unwittingly used as fronts to dodge taxes, but now they are increasing used to launder money as the prime minister pursues a crackdown. The finance minister was irked by the country's lackluster response to issues cited by the FATF. (AFP, Dawn)

The country's Supreme Court summoned records in one money-laundering case. A task force pursuing another case is investigating public-private partnerships as the principal suspect has agreed to testify. Former Pakistani Prime Minister Nawaz Sharif was accused of laundering money through gifts of livestock sent abroad. (Tribune, Tribune, PT, News, PT)

European Union states are discussing an action plan to fight money laundering. The draft calls for clearer powers for banking supervisors and a review of recent cases, but one key change was delayed. The justice minister warned of the security threats involved. (Reuters, Reuters, EI)

The Nordic business model's luster is coming off amid allegations that multiple banks from the region are mired in money laundering scandals. Nokia was the largest recipient of potentially illicit funds moved through Nordea Bank APB, the largest bank of the region, according to a complaint from hedge fund manager Bill Browder. The telecom said it takes such allegations seriously, though it hasn't seen Mr. Browder's claim and therefore can't comment. (FT, Bloomberg)

An Indian jewelry tycoon called a money-laundering case against him one-sided, as he seeks a stay. Separately, an Airbus executive in India is among those facing allegations of money laundering relating to a deal with state-owned Indian Airlines. The company didn't respond to requests for comment. (HT, ET, TN, BT)

The United Arab Emirates introduced a new law against money laundering and terrorist financing. Banks based there are keen to show their efforts. (GN, KT, Reuters, National, KT, KT)

Prosecutions of money laundering have increased 40-fold in the Bahamas. (Tribune242)

Spain's high court agreed to extradite a former Venezuelan official back to her country, where she faces charges of money laundering. (Reuters)

The current FATF president, a U.S. Treasury Department official, wrote an op-ed discussing the money-laundering risks of virtual currencies. (FT)

Book-makers were warned about terrorists laundering money through wagers. (Mirror)

A former Nigerian governor was released from custody as he fights money-laundering charges. Civil society groups want an investigation in another case. (DT, Punch)

Sanctions

The EU is struggling to find a host for its planned special-payment vehicle to handle Iran trade. President Trump, meanwhile, is hearing complaints from Iran hawks that the sanctions are too weak. Is there a "resistance" bloc rising? (FT, AFP, AP, WI)

The EU extended its sanctions on Guinea, Moldova and Burundi for a year. (ES)

U.S. sanctions won't stop Moody's from upgrading Russian debt to investment grade. (Bloomberg)

Venezuela turned to an obscure Russian bank to help it conduct transactions amid U.S. sanctions. (Bloomberg)

Whistleblowers

The Danske Bank A/S whistleblower was freed from a non-disclosure agreement and can testify before the European Parliament. The scandal could have an affect on elections in Denmark next month. (Reuters, Bloomberg, press release, FE)

The IRS has to have better control over its data when making whistleblower award decisions, the GAO said. (press release)

Tempers flared at a Hong Kong inquiry into a scandal involving the region's most expensive rail project after a tipster tried to introduce new evidence without notice. (SCMP)

General Anticorruption

Malaysia's former prime minister backed off claims he has made for two years about the source of hundreds of millions of dollars deposited into his personal accounts. (NST, Star)

Graft is leading democracies to reject China's Belt and Road Initiative. (FA)

Albania's interior minister resigned amid the country's anticorruption push. (AP)

Brazil's president-elect is considering a crusading anticorruption judge to be either his justice minister or serve on the country's highest court. (Reuters)

Anticorruption measures are on the ballot in three states and two cities in the U.S. (HuffPost)

Australia's government is under pressure to form a national anticorruption body. (Xinhua)

The U.S. special counsel's probe continues. Four anonymous plaintiffs accused President Trump, his company and three of his children of promoting fraudulent investments; the White House referred questions to the Trump Organization, which called the allegations meritless. (AT, WP, NYT, NYDN)
https://blogs.wsj.com/riskandcompliance ... arliament/

[seemslikeadream]

Danske money laundering scandal is 'tip of iceberg', whistleblower's lawyer says

LONDON (Reuters) - Danske Bank’s (DANSKE.CO) 200 billion euro ($225 billion) money laundering scandal might be the “tip of the iceberg” and investigators should examine whether major Western banks played a role, a lawyer for the whistleblower said.

FILE PHOTO: General view of the Danske Bank building in Copenhagen, Denmark, September 27, 2018. REUTERS/Jacob Gronholt-Pedersen/File Photo
Stephen Kohn, a partner at U.S. law firm Kohn, Kohn and Colapinto who is representing Danske whistleblower Howard Wilkinson, told Reuters that Danske may be only a bit player in a scheme to move wealth from countries like Russia to the West.

“It looks like the tip of the iceberg,” he told Reuters on the sidelines of a two-day London OffshoreAlert conference on financial intelligence and investigations. “The problem is far bigger than has been reported...

“If this is properly investigated, and the money followed all the way to the end - it all went to large, multinational Western financial institutions and either the U.S. government or other authorities have the ability to track down every transfer and any account,” he said, without providing evidence for the allegation.

Wilkinson, a British former head of markets in Danske’s Estonian branch until 2014, was outed by newspapers in September as the whistleblower who helped lift the lid on how billions of euros of non-resident money, much of it from Russia, had flowed through the tiny branch between 2007 and 2015.

After an internal investigation, published by Danske the same month, the bank said many transactions were probably suspicious. The scandal has sparked criminal investigations of Danske in Denmark, Estonia and the United States, forced out its chief executive and chairman and sent the bank’s shares plunging.

Britain’s National Crime Agency said in September it was investigating the use of UK-registered companies in connection with the Danske Bank case.

RISK OF RETALIATION

Whistleblowers who have been publicly named are at a greater risk of retaliation. Kohn said Wilkinson “has interacted with law enforcement” and is satisfied with their response. He declined to comment further.

The Briton is due to testify before the Danish and European Parliaments next week. But his testimony is likely to be limited because he remains potentially liable for anything he says.

“The threat of a lawsuit has a chilling effect,” Kohn says.

Kohn believes whistleblowers need to be financial rewarded. He won a record $104 million individual reward in 2012 for whistleblower Bradley Birkenfeld, the man who exposed tax evasion facilitated by UBS (UBSG.S) - although Birkenfeld also served almost three years in jail.

The European approach, that effectively turns “informants into martyrs”, is “a joke”, he says.

British lawmakers continue to call for better protection for whistleblowers, who risk ending up blacklisted, bankrupt and damaged after lifting the lid on wrongdoing. But regulators have to date resisted calls for financial incentives, insisting this will not significantly increase integrity and transparency.

Kohn vehemently disagrees. He says whistleblowers might sometimes participate in wrongdoing, but that they are essential to uncovering the truth because white-collar crimes are hidden - and crime is more profitable than honesty.

Since February 1986, when U.S. whistleblowing laws were modernized, the U.S. government has paid whistleblowers $6.5 billion - and billions more have been recovered, he said.

U.S. equity traders to get biggest bonuses this year
“Europe is asleep. I am angry at what I see in Europe,” he told the conference.

Kohn describes Wilkinson, who he says told Danske everything he knew before resigning, as credible, with an unblemished employment history, who risked his career and livelihood to stop one of the biggest money laundering scandals in history.

“He’s the real McCoy (the genuine article). He gives whistleblowing a good name,” he said.
https://www.reuters.com/article/us-dans ... SKCN1NI2HC

[seemslikeadream]

Deutsche Bank, BofA, JPM Are Drawn Into Danske Probe

Deutsche Bank AG and Bank of America Corp. have been contacted by U.S. criminal investigators for information about transactions they handled for a small bank branch in Estonia that’s at the center of one of the biggest money-laundering investigations in history, according to two people familiar with the matter.

The Justice Department investigators have also asked questions about JPMorgan Chase & Co.’s work with the branch, another person said.

The lenders, among the world’s largest, were correspondent banks for the Tallinn, Estonia, branch of Danske Bank A/S that is the focus of multiple international investigations. The Danish lender acknowledged that the branch moved nearly a quarter trillion dollars’ worth of cash into the global financial system, much of it from potentially illicit activity in Russia. It used the three banks’ global presence to convert foreign cash into U.S. dollars on behalf of its clients from 2007 to as recently as 2015.

The examination of whether the big banks gave appropriate scrutiny to the Estonia transactions is one aspect of a broader Danske Bank investigation being led by the U.S. Justice Department in Washington and prosecutors from the Manhattan U.S. attorney’s office, the people said.

The investigation is in its early stages, and there are no signs that the banks themselves are targets. None of them has disclosed contacts with investigators. The banks were discussed in regulatory reports and a Danske Bank internal probe released in September but weren’t mentioned by name.

The Securities and Exchange Commission and the Treasury Department are also investigating the Danske Bank transactions through the global banks, one of the people said.

JPMorgan stopped providing correspondent services to the Danske Bank branch in 2013. Deutsche Bank and Bank of America continued for another two years, according to the reports and the people familiar with the matter. Deutsche Bank handled the bulk of these transactions during the period under scrutiny, one of the people said.

Spokesmen for Deutsche Bank, Bank of America, JPMorgan and Danske Bank declined to comment. Danske Bank’s shares fell 1.9 percent at 3:15 p.m. Friday in Copenhagen. They have declined 44 percent this year.

“The problems related to the Estonian branch were much bigger than anticipated when we initiated the investigations,” Danske Bank said in September. The company’s findings “point to the fact that a number of controls at the group level were inadequate in relation to Estonia.”

Global System

The Danske Bank investigation puts a spotlight on the opaque business of correspondent banking -- a circulatory system of sorts for the $160 trillion in annual cross-border payments that support the global economy, as estimated by McKinsey. Major banks maintain their own accounts with other banks, keeping funds on deposit there and using them to make payments on their clients’ behalf in foreign countries and currencies.

Danske Bank, Denmark’s largest lender, has admitted that a large portion of the roughly $230 billion that flowed through its Estonia branch during the period under scrutiny -- an amount comparable to Estonia’s entire economic output during that time -- was suspicious. In recent weeks the bank’s chief executive officer and chairman have been forced out over the scandal.

The U.S., when it has prosecuted cases alleging illicit use of the financial system, has typically treated the dollar-clearing banks as unwitting dupes or victims. But the facts in the Danske Bank case -- including that at least one of the correspondent banks had money-laundering concerns in 2013 that led it to cease working with Danske Bank -- raise the prospect that authorities may scrutinize their roles.

Under U.S. law, correspondent banks must apply anti-money-laundering controls to foreign banks that include periodic reviews of accounts for suspicious activity. Certain foreign banks require additional scrutiny.

Estonia Branch

In 2013, JPMorgan said it was terminating its relationship with Danske Bank after operating as one of the Estonia branch’s dollar-clearing correspondent for years. The branch, acquired as part of a merger, was a far-flung outpost more than 500 miles from Danske Bank’s headquarters in Copenhagen, across the Baltic Sea. It operated differently than others, retaining its own correspondent banks instead of using those established by its corporate parent.

JPMorgan’s banking role included a two-year period from 2011 to 2013 when the majority of the Danske Bank customers tied to a European money-laundering ring opened accounts, according to a May report by Danish regulators that didn’t identify banks by name.

Regulatory concerns about correspondent banking are well-known in the finance industry. Months before ending its relationship with Danske Bank, JPMorgan was hit with an order from U.S. banking regulators demanding improvements to its anti-money-laundering controls, after finding that its overall practices were too weak to prevent suspect transactions.

As a result, JPMorgan undertook a widespread process known as “de-risking,” in which it reviewed client accounts and closed hundreds that it deemed suspect. (The order is still in place.)

Internal Probe

In June 2013, according to the Danske Bank internal investigation, a JPMorgan executive told a Danske Bank board member that it planned to terminate services for the Estonia branch because of its high percentage of nonresident clients, a potential sign of money laundering. When it did so two months later, another of Danske Bank’s correspondent banks -- Bank of America -- agreed to expand its dollar-clearing business with the branch, according to the internal report. It’s unclear whether Bank of America was aware of JPMorgan’s concerns.

In the meantime, internal and external warning signs were beginning to mount. Danske Bank’s executive board, prompted by the JPMorgan withdrawal, undertook a separate review of the business and noted that the branch was generating larger-than-normal profits from the business, a potential sign that clients were willing to overpay to handle business that other banks wouldn’t touch.

The board was also taken aback by the proportion of the Estonia branch’s profits -- 90 percent -- that were coming from transactions for clients who were residents of other foreign counties, primarily Russia. There were nearly 4,000 non-resident accounts at the end of 2012, according to the internal investigation. At the end of 2014, the branch terminated more than 850 customer relationships, the report said.

Regulators’ Suspicions

Estonian regulators were also increasingly suspicious of the branch’s activities. After conducting inspections in March 2014 and the summer after, it concluded that the Danske Bank branch systematically accepted customers bearing money-laundering characteristics.

It also found that the branch did a poor job of identifying the source of customer funds, closed suspicious customer accounts without notifying authorities and focused more on profits at the expense of money-laundering controls. The Estonian regulators repeatedly pressured Danske Bank to close the branch’s portfolio of foreign accounts and replace the branch’s management, according to the Danish regulatory report.

It’s not clear how much of this was known by Bank of America and Deutsche Bank at the time, even as reports in European news media had begun to trickle out about the “washing machine” operation and the concerns about the Estonia branch.

An internal whistle-blower came forward at the end of 2013 with claims about customers using hundreds of shell companies to move money through the financial system without triggering regulators or law enforcement, according to the internal investigation.

Cutting Ties

Bank of America contacted Danske Bank at the corporate level in May 2015 and asked that transactions on behalf of shell companies from the Estonia branch not be routed through Bank of America.

Two months later, Deutsche Bank followed suit, telling the bank that it had found transactions made by the branch that they were “not comfortable with” -- particularly flagging payments made to parties in Moldova, which was part of the alleged “washing machine” network, according to Danske Bank’s internal investigation.

As Bank of America and Deutsche Bank left the Estonian branch without a means of conducting transactions in U.S. dollars, Danske Bank was in the process of closing down its portfolio of foreign customers at the branch in July 2015. The branch is still operating, though Danske has said it will focus the business on customers with a “solid Nordic footprint.”

— With assistance by Frances Schwartzkopff
https://www.bloomberg.com/news/articles ... nske-probe

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Danske Bank whistleblower talking to US enforcement agencies

DoJ investigates biggest money-laundering scheme ever uncovered


Caroline Binham in London and Richard Milne in Oslo YESTERDAY Print this page
The former Danske Bank manager who blew the whistle on a €200bn money-laundering scandal centred on the bank’s tiny Estonian branch has talked to a multitude of US law-enforcement agencies, raising the stakes for Denmark’s biggest lender as it faces investigations around the world.

Howard Wilkinson — who alleged to Danske bosses that branch customers included shell companies that were fronts for Russian intelligence and relatives of Vladimir Putin, the Russian president — was cleared by the bank to talk to various agencies including the Department of Justice, Securities and Exchange Commission, and the Treasury’s Financial Crimes Enforcement Network, or FinCEN, according to people familiar with the situation.

Mr Wilkinson, a British citizen who will testify to both the Danish and EU parliaments this week, previously signed a non-disclosure agreement with the bank that Danske must waive before he gives evidence. The bank gave permission to Mr Wilkinson’s lawyer each time to meet US authorities.

The DoJ has launched an investigation into the biggest money-laundering scheme ever uncovered, with what amounted to more than Estonia’s annual GDP passing through the branch every year from Russia and other former Soviet states. The agency is also scrutinising the roles played by Deutsche Bank, Bank of America and JPMorgan Chase in clearing cross-border payments for the branch.

FinCEN, which has the ability to order US banks to stop handling cross-border payments for foreign lenders suspected of facilitating money-laundering, has said publicly that it has an active interest in the case.

“The Russian element makes this a high enforcement priority for the US,” said John Coffee, a professor of law at Columbia Law School in New York. “If a whistleblower was rebuffed internally when he came forward with credible information, that would definitely be of interest to DoJ.”


How Danske Bank's Estonia branch became a pipeline for dirty money


In several emails to the bank’s senior management in Copenhagen seen by the Financial Times, Mr Wilkinson laid out how a UK-based limited liability partnership called Lantana Trade “apparently” had beneficial owners that included “the Putin family and the FSB”, the Russian intelligence service. The Kremlin has previously told the FT: “President Putin has nothing to do with the mentioned bank.”

Mr Wilkinson’s warning was followed up in 2014 by Danske’s internal audit team, which confirmed much of what he reported. But the bank did not start its own full investigation until 2017, when Berlingske, a Danish newspaper, started reporting on Danske accounts used in alleged money laundering schemes from Russia and Azerbaijan.

Mr Wilkinson, who once worked at HBOS, the collapsed UK lender, will give evidence on Monday to the Danish parliament alongside Danske’s interim chief executive, Jesper Nielsen. Mr Nielsen has taken the reins after the scandal toppled former CEO Thomas Borgen. Mr Borgen was head of international banking, which included responsibility for Baltic banking, from 2009 until 2012.

Danske also partially released Mr Wilkinson from his NDA to give evidence to the Danish parliament. But he still faces the threat of criminal prosecution from what he tells parliamentarians, particularly if he strays into details about clients, according to his lawyer, Stephen Kohn.

Mr Kohn said Mr Wilkinson’s testimony will not be privileged, or carry protection from libel. Meanwhile, the bank’s waiver included a warning that it could not release him from “mandatory” obligations under bank-secrecy and data-protection laws.

“It is unacceptable that Mr Wilkinson, who was an exemplary employee when he worked for Danske Bank, may face further retaliation based on his testimony before parliament,” Mr Kohn said. “We have been informed that legal protections for whistleblowers who appear before parliament also do not exist. This is an untenable position. It is not possible for a democracy to properly function if members of parliament cannot obtain complete information from witnesses.”

Danske, the DoJ and the SEC declined to comment. FinCEN did not return a request for comment.

https://www.ft.com/content/78c7ab66-e9c ... tlhomepage

And the real reason Justice Kennedy retired would be?

[seemslikeadream]

Danske whistleblower says big European bank handled $150 billion of payments
COPENHAGEN (Reuters) - The whistleblower who revealed alleged money laundering involving Danske Bank (DANSKE.CO) said on Monday that a major European bank helped process up to $150 billion in suspicious payments and two U.S. lenders were also involved.

Danske Bank whistleblower Howard Wilkinson speaks at a public hearing at the Danish parliament in Copenhagen, Denmark, November 19, 2018. Ritzau Scanpix/Liselotte Sabroe via REUTERS
Authorities in Denmark, Estonia, Britain and the United States are investigating payments totaling 200 billion euros ($228.5 billion) made through Danske Bank’s tiny Estonian branch between 2007 and 2015 in a growing global scandal.

Howard Wilkinson, who was head of Danske Bank’s trading unit in the Baltics from 2007 to 2014, told a Danish parliamentary hearing that other banks were also involved.

“I would guess that $150 billion went through this particular bank (the large European bank) in the U.S.,” the Briton said, without naming any of the other banks.

Deutsche Bank (DBKGn.DE), JPMorgan (JPM.N) and Bank of America (BAC.N) all cleared dollar transactions for Danske’s Estonian branch, some until 2015, sources have told Reuters.

The leading German bank and JPMorgan, which one of the sources said ended its correspondent relationship with Danske’s Tallinn branch in 2013, both declined to comment. Bank of America, which has previously declined to comment on the case did not immediately respond to an email seeking comment.

“No one really knows where this money went. All we know is that the last people to see it was these three large banks in the U.S. They were the last check, and when that failed, the money was into the global financial system,” Wilkinson said.

Interim CEO Jesper Nielsen said the affair had tarnished the reputation of Danske Bank.

“We have breached the expectations society had of us. The case and the course of events around it does not reflect the bank we want to be,” Nielsen told the Danish lawmakers after Wilkinson’s testimony.

Wilkinson said that he had been offered cash by Danske Bank not to speak out, but had got a waiver last month allowing him to talk to some U.S. authorities, adding that he did not expect investigations into the “dirty money” to bear fruit.

“There is no chance in the world ... that any of that money is ever going to be tracked down and that any criminals lose a single cent,” he said.

“LACK OF INTEREST”

Danske Bank has acknowledged that its money laundering controls in Estonia were insufficient, but in a report issued in September said its board, chairman and chief executive had not breached their legal obligations.

“In April 2014 it became clear that the bank didn’t intend to do anything,” the former Danske Bank employee said, referring to earlier whistleblower reports. “There was a curious lack of interest at senior management level.”

Wilkinson said that at the start of January 2014 he had looked at the three most profitable accounts involving British limited liability partnerships (LLPs).

“They were all fake. Not just that, they all basically looked the same. And it turned out they all had the same registered office in a suburb in North London ... I passed those on. By April none of the accounts ... had been closed down.”

“I warned them (Danske) that if they didn’t do a proper investigation and make the appropriate report to the police, then I was going to do it myself,” Wilkinson said.

In September this year Danske Bank said the first whistleblower report, which was titled “Whistleblowing disclosure – knowingly dealing with criminals in Estonia Branch”, was sent to its executive board, group compliance and internal auditor at the end of December 2013.

Homebuilding, reimagined: modular & multi-family
However, the bank’s report concluded that no “red flags” were shared with ex-CEO Thomas Borgen when he held ultimate executive responsibility for Estonia from 2009 to 2012.

Borgen stepped down as CEO following the September report, saying that although he was “cleared from a legal point of view” he held “the ultimate responsibility”.

The scandal has emerged at the same time as a major government tax scandal and a fraud case in the Danish ministry for social affairs, undermining confidence in once trusted institutions and sparking calls for action from lawmakers.

Wilkinson said that Denmark’s FSA financial regulator, which was not immediately available for comment, did not contact him before issuing a report on the allegations in May 2018 and called for Danish authorities to investigate the FSA’s role.

“If Howard Wilkinson is correct in that he can’t talk to the Danish authorities without being prosecuted that must obviously be changed. Authorities should investigate the case thoroughly and they can only do that if they can get the information, Danish business minister Rasmus Jarlov said on Twitter.

The FSA said in May it had not found sufficient basis for launching cases against members of Danske Bank’s management.

Reporting by Teis Jensen, additional reporting by Stine Jacobsen; Writing by Alexander Smith; Editing by Keith Weir
https://www.reuters.com/article/us-dans ... SKCN1NO0ZR

Danske’s Cast of Characters Steps Into the Limelight
Frances Schwartzkopff

Photographer: Freya Ingrid Morales/Bloomberg
The general public is about to get a much closer look at some of the key protagonists attached to the Danske Bank A/S money laundering scandal.

Howard Wilkinson, the whistle-blower who used to work at the Estonian unit at the center of the case, will testify before lawmakers in Copenhagen on Monday.
Stephen Kohn, Wilkinson’s lawyer and a founding director of the National Whistleblower Center, will join his client.
Jesper Nielsen, Danske’s interim CEO, will represent the bank after Thomas Borgen was escorted out of the building last month for his role in the scandal.

Photographer: Freya Ingrid Morales/Bloomberg
Jesper Berg, the director general of the Danish FSA, will testify after the agency was placed under investigation by the European Banking Authority.
The Danish parliament will hear testimony on who knew what, and when, amid evidence that much of about $230 billion that flowed through an Estonian unit of Danske between 2007 and 2015 was illicit. Wilkinson’s lawyer says the Briton is “fully committed” to cooperating with the Danish parliament.

But the former Danske employee has already said he feels that his personal safety is at risk from “angry” former employees at the Estonian branch, and from clients who benefited from the setup there.

Danske is under criminal investigation by the U.S. Justice Department. The one thing everyone now wants to know is how severely the U.S. will come down on Danske which, as Denmark’s biggest bank, has assets that are equivalent to about 1.5 times its GDP.

Both Danske and the Danish government are making clear they won’t push back against the DOJ and just want to put the scandal behind them as soon as possible.

Business Minister Rasmus Jarlov says, “The case obviously shouldn’t be too drawn out.”

Danske has gone from dismissive to humble. A few months ago, the (since ousted) chairman said a U.S. investigation in such a case would be “highly unusual.” Now, the acting CEO says Danske will do everything in its power to cooperate.

U.S. Approach

David Miller, a former prosecutor at the DOJ, says prosecutors and senior leadership at the department “are cognizant of the importance in not crippling important, large financial institutions with multi-billion fines. But that doesn’t mean that there won’t be that level of fines imposed.”

For now, Denmark is operating under the assumption that Danske won’t be fined more than about $1.5 billion. That’s what the Danish regulator has told the bank to have in extra capital because of the laundering case. Analysts have estimated that Danske could be facing a penalty as high as $8 billion.

Carol Beaumier, an anti-laundering expert at the consulting firm Protiviti, says U.S. authorities will take into consideration how much Danske has done to clean up its act.

“Typically, if you look at how enforcement actions play out in the U.S., they will look at how responsive the institution, its management and its board have been, to the issues and what improvements they’ve made on their own,” she said.

Being Responsive

Danske has been responsive. The man who oversaw its Baltic operations from 2012 left in April. Borgen, the former CEO, was removed in October. Ole Andersen, the chairman, is set to leave on Dec. 7 after Danske’s biggest shareholder, frustrated by developments, called for his replacement. The bank has also published a report detailing its failures, and it’s spending a lot more on compliance.


Photographer: Freya Ingrid Morales/Bloomberg
One path Danske might take would be a so-called deferred prosecution agreement, in which it would agree to pay a fine and do more to beef up its anti-money laundering defenses. In exchange, the bank gets to avoid a court battle.

A settlement with the U.S. would bring to a tentative close only one of several investigations. Danske is the subject of probes in at least five countries, including a U.K. investigation into the shell companies that were created to enable the transfer of dirty money.

The Danish state prosecutor has said it’s going after people, not just the bank. The tone around the case has changed, as politicians outdo each other with promises to punish bankers. According to Berlingske, the newspaper to which Wilkinson turned to tell his tale, eight Danske bankers in Estonia allegedly received cash payments from clients to help launder funds.

Danske Whistle-Blower Committed to Cooperating, Lawyer Says

Raymond Baker, founder of Global Financial Integrity, says experience suggests that only jail time will make difference.

Danske is “simply the latest example among a lot of banks that have been caught handling dirty money,” Baker said. “We hit banks with fines and there have been a lot of fines, but even the fines aren’t big enough to get the attention of the banks. I would hope that Europe would send some people to jail in this particular scandal and let that begin to be a lesson.”

(Adds whistle-blower interview with Berlingske.)
https://www.bloomberg.com/news/articles ... -limelight

Deutsche Bank Is Said to Be Drawn Deeper Into Danske Scandal
Steven AronsNovember 19, 2018, 9:28 AM CST


By and
Christian Wienberg
November 19, 2018, 5:50 AM CST

Whistleblower says bank moved $150 billion through U.S. unit

Howard Wilkinson says Danske offered him money to stay silent


Deutsche Bank AG headquarters stands on Wall Street in New York.
Photographer: Victor J. Blue/Bloomberg
Deutsche Bank is being drawn deeper into the widening money-laundering scandal surrounding Danske Bank.

Whistle-blower Howard Wilkinson, who stunned a parliamentary hearing with an assertion that he was offered hush money by the Danish lender, estimated that more than half the $230 billion in suspect funds handled by the bank was funneled through Deutsche Bank AG’s U.S. unit. While he didn’t identify the lender, a person familiar with the matter confirmed it was Deutsche Bank.

Howard Wilkinson, left, speaks in Copenhagen, Nov. 19.
Photographer: Carsten Snejbjerg/Bloomberg
The firm was a correspondent bank for the Tallinn, Estonia, branch of Danske Bank that is the focus of multiple international investigations. The Danish lender acknowledged that the branch moved nearly a quarter of a trillion dollars worth of cash into the global financial system, much of it from potentially illicit activity in Russia. It used the global presence of Deutsche Bank, Bank of America Corp. and JPMorgan Chase & Co. to convert foreign cash into U.S. dollars on behalf of its clients from 2007 to as recently as 2015.

Stock Declines

Deutsche Bank declined as much as 1.1 percent in Frankfurt and was trading 0.4 percent lower as of 3:51 p.m. The stock has declined about 46 percent this year. The lender declined to comment.

Wilkinson made his first public appearance since the Danske scandal erupted, telling lawmakers in Denmark that their biggest bank had offered him a severance package in return for his silence after he threatened to alert the police. Danske interim Chief Executive Officer Jesper Nielsen, who also testified on Monday, denied that he was offered hush money.

Wilkinson, who used to run the trading desk at Danske’s Baltic business, also gave a detailed account of how money flowed from Russian banks into Danske and then out into the wider financial system, with the help of the correspondent banks.

“This was the main correspondent bank for U.S. dollars,” Wilkinson said of the bank that he only identified as a large European lender. “And they were the last one to go, it took them until 2015, at least nine years.”

Criminal Investigators

Deutsche Bank has been contacted by U.S. criminal investigators for information over the case, along with Bank of America, two people familiar with the matter said late last week. The Justice Department investigators have also asked questions about JPMorgan Chase & Co.’s work with the branch, another person said. Wilkinson on Monday said he didn’t want to name banks because he is concerned he could go to jail or face other legal action.

The examination of whether the big banks gave appropriate scrutiny to the Estonia transactions is one aspect of a broader Danske Bank investigation being led by the U.S. Justice Department in Washington and prosecutors from the Manhattan U.S. attorney’s office, the people said.

The potential extent of Deutsche Bank’s role in the scandal -- Danske Bank has admitted that a large portion of the billions that flowed through its Estonia branch during the period under scrutiny was suspicious -- will be an unwelcome setback for Chief Executive Officer Christian Sewing as he seeks to revive growth at the lender.

Correspondent Services

JPMorgan stopped providing correspondent services to the Danske Bank branch in 2013. Deutsche Bank and Bank of America continued for another two years, according to the reports and the people familiar with the matter. Deutsche Bank handled the bulk of these transactions during the period under scrutiny, one of the people said.

At least 10 banks were involved in the Danske laundering scandal, including three “Danske entities,” Wilkinson said at the hearing. With his lawyer Stephen Kohn by his side, Wilkinson also took the opportunity to rip into the practice of imposing non-disclosure agreements on employees if Europe is serious about tackling crimes like money laundering.

Interim CEO Jesper Nielsen rejected Wilkinson’s account that he was offered hush money and said that, as far as he was aware, the bank never stopped anyone from speaking out.

“There’s nothing at Danske bank that prevents anyone from talking to the police or authorities,” Nielsen said. “To the contrary, we’re encouraging people to do so.”

— With assistance by Peter Levring, and Tasneem Hanfi Brogger

(Adds details on Wilkinson in fifth paragraph, Danske denial.)
Danske Bank Whistle-Blower Maps Out Where the Dirty Money Flowed
Before it's here, it's on the Bloomberg Terminal.
https://www.bloomberg.com/news/articles ... -testimony

[seemslikeadream]

Deutsche Bank Handled $150 Billion of Potentially Suspicious Flows Tied to Danske
German lender’s shares drop on investor concerns about the scandal’s impact on its profitability

By Jenny Strasburg and Patricia Kowsmann Nov. 20, 2018 9:38 a.m. ET
Preliminary findings of an internal review by Deutsche Bank AG DB -5.62% of its role in a massive money-laundering scandal at Danske Bank suggest the German lender handled about $150 billion of the total amount of potentially suspicious transactions tied to Danske, according to a person familiar with the matter.

Deutsche Bank’s findings aren’t final and haven’t been made public. It has been trying to assess its exposure to allegations of money laundering involving flows from Russia and elsewhere through Denmark’s largest bank. U.S. law enforcement agencies are probing transactions at Danske’s tiny Estonian branch over several years through 2015 where $230 billion flowed through accounts of non-Estonian account holders at the branch.

On Monday, a British former trader at Danske’s Estonian branch, Howard Wilkinson, testified publicly at a Danish parliamentary hearing about the scope of the alleged activity he witnessed at the small outpost.

Investor concerns about the impact of the Danske scandal have contributed to a drop in Deutsche Bank shares which are down more than 48% this year and hit new lows of near €8 ($9) Tuesday.

Deutsche Bank's share price
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The shares had partially recovered by midday Tuesday in Germany, trading near €8.30, representing a 3% decline for the day. The Stoxx Europe 600 Banks index was down 1.8%.

The Danske concerns come as Deutsche Bank’s shares have fallen on broader doubts about its profitability.

“Deutsche Bank acted as correspondent bank for Danske Bank DNKEY -3.63% in Estonia,” a Deutsche Bank spokesman said. “Our role was to process payments for Danske Bank. We terminated this relationship in 2015 after identifying suspicious activity by its clients.”

Deutsche Bank has received requests for information from U.S. officials about Danske-related transactions, according to people familiar with the matter.

Mr. Wilkinson, who worked at Danske’s Estonian branch until 2014, pointed fingers at the three U.S. correspondent banks that cleared U.S. dollars for Danske Estonia for not catching suspicious flows of money. He singled out Deutsche Bank, referring to it only as the U.S. subsidiary of a European bank that served Danske throughout the period under investigation, between 2007 and 2015.

“This was the major correspondent bank for U.S. dollars, so when we are talking about this $230 billion number of suspicious funds, I would guess that $150 billion went through this particular bank in the U.S.,” he said.

His estimate roughly matches Deutsche Bank’s own preliminary findings, according to the person familiar with that review.

Correspondent banks serve as intermediaries in international transactions, handling transfers for other banks doing business in countries where they have limited operations.

Deutsche Bank handles $450 billion to $500 billion in U.S. dollar transactions, on average, each day, according to a person close to the business.

JPMorgan Chase & Co. served as correspondent bank for Danske Estonia until 2013, when it was replaced by Bank of America Corp. , which cut ties with the Estonia branch over money laundering concerns in 2015. Those banks have declined to comment.

In September, Danske Bank said in reporting findings from a law firm it hired that around $230 billion washed through its Estonian branch via thousands of accounts. A large part was deemed suspicious. The bank’s CEO resigned with the release of the report.

Deutsche Bank is a major correspondent bank for U.S. dollar transactions. Banks are responsible for policing such money flows and flagging transactions they deem suspicious. Suspicions can be based on origin of funds or concerns about who’s sending or receiving money.

Deutsche Bank has come under fire repeatedly from U.S. and European watchdogs for weaknesses in its policing of financial crime. The unit responsible for money-laundering has suffered high-level turnover. In recent months, its global and U.S. heads of financial crime-fighting have both left for jobs at other banks. The global head, Philippe Vollot, joined Danske Bank as chief compliance officer and an executive board member.

Write to Jenny Strasburg at jenny.strasburg@wsj.com and Patricia Kowsmann at patricia.kowsmann@wsj.com
https://www.wsj.com/articles/deutsche-b ... 1542724703