Danske Bank pleads guilty to US fraud, to forfeit $2bn

Bloomberg

Danske Bank A/S admitted to fraud and will pay $2 billion to end a long-running US probe into money laundering at its Estonia branch, helping draw a line under the worst scandal in the bank’s recent history.
The Danish lender pleaded guilty to conspiring to commit bank fraud and admitted providing banking services to suspicious customers — including in Russia — through its Estonian branch, despite knowing of the money laundering risks, the US Justice Department (DOJ) said.
Danske is working to move past a scandal that wiped out top management and saw thousands of customers leave in one of Denmark’s worst ever cases of corporate malfeasance. The case has left a scar on a country more known for financial transparency, adding to a list of northern European lenders including ABN Amro Bank NV and Deutsche Bank AG, that have been ensnared in money laundering issues.
“The settlement is wrapping up in a case that has taken up a lot of resources and it will allow the bank’s management to focus on developing the actual business,” said Jens Munch Holst, chief executive officer at AkademikerPension, a Danish pension fund with about $20 billion in assets.
“It will be a long, long hard slog to restore the reputation to the level it was before 2018.”
Danske shares gained as much as 2.6% in Copenhagen and traded up 2.4%.
The scandal was unveiled by an overlooked whistleblower in Danske’s Estonian branch who contacted Danish media to reveal that the bank had ignored signs indicating “potentially criminal transactions” to move billions of dollars to the West from 2008 to 2017, including from Russian customers, the Justice Department said. Danske Bank said in 2018 that it failed to adequately screen 200 billion Euros ($213 billion) in non-resident cash.
“For years, Danske Bank lied and deceived US banks to pump billions of dollars of suspicious and criminal funds through the US financial system,” Manhattan US Attorney Damian Williams said. The largest bank in Denmark “deliberately disregarded US law” and “facilitated the laundering of criminal and suspicious proceeds” through the US financial system, he said.
The scandal isn’t the worst crisis ever to hit Danske Bank. In the 1920s, its rapid expansion ended in near-collapse with the Danish state coming to the rescue. The CEO back then, Emil Glueckstadt, ended up in jail for downplaying the extent of the bank’s woes. He died in custody pending trial, and much of his estate was used to cover the court expenses relating to the scandal.