Bankers in $220bn scandal offered gold to hide client cash

Bloomberg

At the height of the Danske Bank A/S dirty-money scandal, the lender started offering gold bars to wealthy clients to help them keep their fortunes hidden, according to documents seen by Bloomberg.
The bank’s Estonian branch, which was already wiring billions of client dollars to offshore accounts, told a select group of customers, mostly from Russia, that they could now also convert their money into gold bars and coins, according to the documents, which date back to the middle of 2012.
Aside from offering a hedge against risk, Danske pitched gold as a way for clients to achieve “anonymity,” according to the documents. It also said that using gold ensured “portability” of assets, according to an internal presentation dated June 2012.
A spokesman for Danske Bank declined to comment. In Danske’s September 2018 tell-all report on its non-resident unit, the bank listed the services it provided to clients. Aside from payments, these included setting up foreign-exchange lines, as well as bond and securities trading. The bank didn’t list the sale of gold bars.
Danske Bank, which is being investigated across Europe and in the US after failing to screen about $220 billion that gushed through its non-resident unit in Estonia from 2007 to 2015, has now shuttered the operations at the heart of the scandal. That’s after local authorities kicked Danske out, as the scope of the affair became clear.
Jakob Dedenroth Bernhoft, a Copenhagen-based lawyer who specialises in compliance and money laundering issues, said, “It puzzles me that the bank’s own report on the case didn’t discover this. This is a service that is completely against all anti money-laundering laws. It is definitely suspicious.”
“Gold is a great asset for money laundering as it has a steady value,” he said. “You can sell it without losing much value and you get cash and a receipt in hand. If you buy a car or something like that, the value drops immediately.”
Gold plays a special role in the historic ties between Russia and Estonia, which gained independence after WWI only to be swallowed up by the Soviet Union in 1940.
A century ago, communists fresh from the Russian revolution used Estonia as a bridge to channel vast quantities of gold taken from the murdered family of Czar Nicholas II into the West.
In the early 1920s, about 700 tons of Czarist coins dodged a western blockade by passing through Tallinn with the knowledge of the country’s leaders, before heading for Scandinavia and the UK Today’s Russian elite may have used the same path.
It’s not known how much gold Danske managed to sell while the now defunct Estonian unit was still running.
But according to an internal email seen by Bloomberg, at least some clients used the service. Local private banking clients were also offered the service.