A look into Danske bank
Danske Bank is a Danish multinational banking and financial services corporation. It was founded in 1971 and is the largest bank in Denmark. They have $94,972,680,000.00 assets under management in 2022. Currently, they have banks in Finland, Norway, Sweden, Lithuania, Poland, the United Kingdom, Northern Ireland, Ireland, India, and New York. Danske Bank is currently being sentenced due to non-compliance of Anti-Money Laundering (AML) regulations.
Sampo Bank creating Anti-Money Laundering problems for Danske
In 2007 Danske acquired Sampo bank in Estonia, also known as Danske Estonia. They offered services through a subsidiary in Estonia until mid-2008. Danske then moved its operations to a branch headquartered in Estonia through its International Banking Group (IBG). The International Banking group operates the Danske Estonia branch as a Non-Resident Portfolio also known as NRP.
Although NRPs are very profitable, NRP consumers are located in high-risk jurisdictions. The NRP customers conducted business with US dollars which required Danske Estonia to use three U.S. banks located in the Southern District of New York (SDNY) to process transactions.
To open accounts NRP customers were not required to fill out a know-your-customer (KYC) review. Danske Estonia was aware of NRP customers engaged in suspicious and potentially criminal transactions through internal audits.
Anti-Money Laundering Concerns
Anti-Money Laundering concerns started to rack up for Danske Estonia. The Central Bank of Russia sent a letter about transactions that have “Doubtful origin”. Then the Estonian Financial Supervisory Authority said they were “mostly in compliance” in that their supervision was not satisfactory. Then the Danish Financial Supervisory Authority shared concerns as well in that they issued a report concluding that Danske Estonia allowed economic interests to overshadow due diligence. One important aspect is that Danske Estonia did not notify the banks in the United States of these AML concerns. This means that the US banks continued to process illegal transactions all while Danske Bank knew that they weren’t meeting compliance regulations.
Although there were multiple warnings, several hundred billion in suspicious transactions allegedly were processed overtime at the bank’s former Estonian branch.
Repercussions of “Mostly in Compliance”
Danske Bank closed its Estonian Branch and was sentenced in the Southern District of New York to 3 years of probation and owes over 2 billion dollars. As a result of the sentencing, Danske Bank was ordered to make a payment of over $1 billion. The bank received credit for the rest of the owed money promising to pay $178.6 million to the Securities and Exchange Commission and $672.3 million to Denmark authorities. Danske Bank’s troubles also include lawsuits brought by investors claiming to have been defrauded.
How TTI can help
Small branches can pose a particular risk for money laundering in the absence of sufficient oversight. Truth Technologies‘ provides software that can help prevent financial crime within your organization. Contact us today for a free demo and see how we can help your organization adhere to the Bank Secrecy Act and AML/KYC regulations.
For more information click here: https://www.moneylaunderingnews.com/2023/01/sdny-sentences-danske-bank-in-massive-aml-scandal/
