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Danish financial institution fined $2 billion for anti-money-laundering compliance failures
On December 13, a Danish global financial institution pled guilty to conspiring to commit bank fraud and agreed to forfeit approximately $2 billion. According to court documents, the financial institution defrauded U.S. banks at which it held correspondent accounts by misrepresenting the state of its AML controls and transaction monitoring capabilities. According to the Department of Justice, between 2008 and 2016, the financial institution offered banking services through its Estonia branch, including a business line serving non-resident customers (known as “NRP”). The Estonia branch allowed NRP customers to transfer large amounts of money with little to no oversight, and branch employees conspired with NRP customers to hide the true nature of the transactions, including through the use of shell companies that obscured the actual owners of the funds. During this period, the Estonia branch processed $160 billion through U.S. banks on behalf of NRP customers.
The financial institution and its Estonia branch were required to provide information to U.S. banks in order to open and maintain correspondent accounts. This included information related to AML controls, transaction monitoring, and customers. By at least February 2014, the financial institution became aware of some NRP customers who were engaged in highly suspicious and potentially criminal transactions, including through U.S. banks. The DOJ noted that the financial institution was also aware that the Estonia branch’s AML program and procedures were not appropriate to meet the risks associated with NRP customers, but instead of providing truthful information, the financial institution lied about the state of the Estonia branch’s AML compliance program.
Under the terms of the plea agreement, the bank has agreed to a criminal forfeiture of $2.059 billion. The bank will also enter into separate criminal or civil resolutions with domestic and foreign authorities. The DOJ will credit approximately $850 million in payments made by the financial institution to resolve related parallel investigations by other domestic and foreign authorities. The DOJ noted that the financial institution “received full credit for cooperation and remediation because it provided full cooperation with the investigation and demonstrated recognition and affirmative acceptance of responsibility for its criminal conduct.”
The same day, the SEC announced fraud charges against the financial institution in connection with a related, parallel proceeding. The financial institution agreed to pay roughly $413 million, including a $178.6 million civil monetary penalty, as well as $178.6 million in disgorgement and $55.8 million in prejudgment interest. The SEC said it will deem the disgorgement and prejudgment interest satisfied by forfeiture and confiscation ordered in parallel criminal cases with the DOJ, the United States Attorney’s Office for the Southern District of New York, and Denmark’s Special Crime Unit.