Danske Bank is facing a fresh investigation by Estonian financial regulators amid a growing scandal for Denmark’s largest lender and its management over money-laundering allegations.  The Estonian Financial Supervision Authority on Tuesday said it would investigate whether Danske had failed to provide information about allegations of money laundering linked to the Russian elite and intelligence services.  Estonian regulators first investigated Danske over alleged money laundering in 2014. The probe increases the pressure on Danske’s senior management, who are facing an increasing outcry from Danish politicians about why the lender did not act more quickly to sort out problems in its Estonian business.  Danske has faced a spiralling series of allegations from Danish newspaper Berlingske that lax controls in its Estonian operations led to potential money laundering from the likes of Azerbaijan, Moldova and Russia.  Jeppe Kofod, an opposition Social Democrat MEP, said Danske was facing “a world-class scandal”. He added: “The affair highlights a total lack of responsibility at Danske Bank as well as the authorities in Denmark, Estonia and the EU.”  Danske started its own investigation in September that is due to be finished later this year. It also appointed Jens Madsen, the former head of Denmark’s intelligence agency as well as ex-chief of its fraud squad, to head a new compliance incident team. It also admitted to “major deficiencies in control and governance” in Estonia that allowed its branch there to potentially be used for money laundering.  But some Danish politicians argue that is not enough. Lisbeth Bech Poulsen, an MP for the opposition Socialist People’s party, said: “It is clear that Danske Bank cannot or should not investigate itself. It is therefore time that the Danish financial regulator and anti-fraud police take charge.”  The Danish FSA said it could not comment on whether it was investigating Danske or not. It added that the supervision of Danske’s Estonian branch for money laundering was in general a matter for Estonian authorities but that the Danish regulator could become involved if the allegations were so serious that they raised questions about management and governance.  Anders Jorgensen, head of group compliance at Danske, said: “We are not able to comment in details on our dialogue with the authorities. However, we have a constructive dialogue with the Estonian authorities. We have launched a thorough investigation to get to the bottom of the events at that time in our Estonian branch.”  Thomas Borgen, Danske’s chief executive since 2013, called the lack of controls in Estonia “deeply regrettable and completely unacceptable”. Danske was in December fined DKr12.5m ($2m) by Danish authorities for violating anti-money laundering rules unrelated to the specific allegations in Estonia.  Berlingske newspaper reported this week that Danske’s senior management was informed in 2013 by a whistleblower of allegations that a relative of Russian president Vladimir Putin and Russia’s intelligence services were behind money laundering in the bank’s Estonian branch. Latvia is another Baltic country in the spotlight over potential money laundering after the enforced collapse of its third-largest bank over the weekend.

BACKGROUND: Russian money laundering scheme – Danske Bank Estonia back in the spotlight




The Estonian branch of Danske Bank closed several accounts in 2013 after very large sums had passed through the bank as part of a large-scale money laundering scheme. A more recent report based on statements of a whistleblower now confirms that the bank completely failed to notice the suspicious payments.

The Organized Crime and Corruption Reporting Project (OCCRP) quoted a financial investigator in its summary of the report on Monday, who maintains that Danske Bank Estonia’s failure in this case was spectacular.

“The activity in the account was in every way indicative of money laundering – many large transactions and all of them done in one or two days – money did not linger,” L Burke Files explained.

Danske failed to ascertain who controlled one of the companies involved, Lantana Trade LLP. The company falsely reported to the UK Companies House in 2013 that it had no active business, while in fact enormous sums passed through its Danske accounts every day.

The bank only took action after the payments were made, launching an internal investigation. They looked into the ownership of Lantana. It quickly became clear that the company had been involved with several Russian banks that had been closed down in recent years, the OCCRP wrote in its summary.

One of those banks, Promsberbank, lost its license in 2015, at around the same time Lantana was liquidated. One of the bank’s board members was Igor Putin, a cousin of Russian President Vladimir Putin.

Putin was a board member of the Russian Land Bank as well, which was implicated in the so-called Russian Laundromat, a criminal scheme that moved €20.8 billion out of the country through 112 bank accounts, involving Russian security service FSB as well as accomplices in other countries’ top political and business circles.

Among Promsberbank’s shareholders was Alexander Grigoriev, a businessman with ties to the FSB who was arrested in 2015. Another was Alexei Kulikov, arrested in 2016 for large-scale fraud.

All three were also linked to another criminal scheme that they ran at Deutsche Bank in Moscow, where they ran a mirror trading circle that allowed selected Russian clients to convert currency.

The people at Danske tasked with looking into the case were threatened and intimidated, with people in Tallinn receiving threats that they shouldn’t walk home alone at night. Soon after, the Estonian branch of the bank closed Lantana’s accounts as well as those of 20 other businesses connected with the company.

According to the OCCRP, the bank is still looking into the case and so far is saying that on the basis of what they know now, they should have reacted faster. But according to Files, the actual situation is far worse: someone chose not to look or investigate.

The OCCRP is one of two recipients of the report, the other one being British daily The Guardian.

Financial Supervision Authority may launch investigation

The Estonian Financial Supervision Authority suspects the Estonian branch of Danske Bank of misleading the authority and is currently deliberating launching an investigation into the branch’s activity in connection with money laundering.

The Financial Supervision Authority announced that it conducted inspections at the Estonian branch of Danske Bank in 2014, during which the authority identified extensive, long-term and systematic violations of norms concerning the blocking of money laundering. The authority also determined that Danske had not sufficiently analyzed its client, Lantana Trade LLP.

During the aforementioned investigation, Danske’s Estonian branch did not provide proof of there being an internal analysis in which suspicions aout Lantana Trade LLP’s real beneficiary or corresponding businesses were detected or presented. Among other things, the complaint filed with the bank by the supervision authority involved its inactivity concerning the aforementioned company.

The possible misleading of a financial supervision authority in supervision proceedings is a serious violation if Danske Bank itself had additional information in question about its customer which was not presented during the inspection on site. The Financial Supervision Authority is considering investigating whether this was possibly the case.

Financial Supervision Authority spokesperson Piret Lakson said that the investigation is not public and the authority will not provide more detailed comments on whether and when the investigation will be launched.

and more BACKGROUND: Russia VIPs Laundered Millions via Danske Bank Estonia




The Estonian branch of Danske Bank, Denmark’s biggest bank, closed the accounts of several companies in 2013 after realizing they had been used by a member of Vladimir Putin’s family and Russia’s intelligence service, FSB, to launder huge amounts of money, according to a leaked report.

A whistleblower had informed the bank’s Executive Board that the anti-money laundering procedures at its Estonia branch had completely failed and that the bank may “have committed a criminal offense” by aiding a company that had made several suspicious transactions and whose actual owners “included the Putin family and FSB.”

Danske Bank Estonia is already implicated in other money-laundering schemes, involving billions of dollars from Azerbaijanflowing through the branch, some of which ended up in the pockets of European politicians who praised the Baku regime, a chronic human rights abuser.

Another investigation – the Russian Laundromat – revealed that US $20–80 billion was moved out of Russia through a network of global banks, including Danske.

The latest revelations come from the whistleblower report that was recently obtained by the Danish newspaper Berlinske and shared with the OCCRP and the Guardian.

It says that the company Lantana Trade LLP had in 2013 falsely reported to the UK Companies House that it had a low turnover and was dormant. In fact, huge amounts of money passed through the accounts daily.

The branch failed to establish who controlled the company which had made “suspicious payments just under compliance control limits,” according to the whistleblower’s account.

Asked how serious the bank’s failure was, International financial investigator, L Burke Files, said “on a scale of 1 to 10 – it was an 11.”

“The activity in the account was in every way indicative of money laundering – many large transactions and all of them done in one or two days – money did not linger,” he explained.

Only after the transfers were already made, the branch launched an internal investigation that revealed who the company’s owners really were and that they “have been involved with several Russian banks that had been closed down in recent years,” the report says.

One of those banks was the little-known Promsberbank, based near Moscow, that lost its license in 2015, the same year Lantana was dissolved.

One of its board members was Vladimir Putin’s cousin, Igor Putin, who also sat on the board of the Russian Land Bank, RZB, which was involved in the Russian Laundromat scheme.

Among its shareholders were Alexei Kulikov, who was arrested in 2016 for “large-scale fraud” and Alexander Grigoriev, a banker with FSB ties and one of the Russian Laundromat masterminds. He was arrested for money laundering in 2015.

All three were linked to the so-called mirror-trades affair at the Deutsche Bank’s Moscow division, which ran a $10 billion scheme that allowed selected Russian clients to convert roubles into dollars.

During the investigation the Danske Bank’s branch conducted, an account manager flew to Moscow to find out who really owns Lantana but left the meeting at the company’s headquarters shaken and reported that the clients were “furious.”

A few days later, bank staff was warned by unidentified Russian-speaking people in Tallinn against “walking home alone at night.”

Soon after, the Estonian branch closed the accounts of Lantana and 20 other companies with which it had exchanged very large sums of money – including some involved in the Deutsche Bank scandal.

Danske Bank launched a probe into what happened in its Estonian branch only in 2017, after other money laundering affairs there became known.

That’s “very bad,” said Files. “Someone chose not to look or investigate.”

Danske said on Monday it was still investigating what was going on in Tallinn and that it had closed the portfolio involving Russian non-residents.

“On the basis of what we know now, we should have done this faster,” the bank said in a statement. “Today, we have a very different and stronger control setup in Estonia.”