Scandal begins: Billions laundered in Estonia (2007-2015)

The Danske Bank scandal, one of Europe's most extensive cases of financial crime, erupted publicly in 2017. It centered on the bank's Estonian branch, where billions of euros were channeled through in the form of possible money laundering between 2007 and 2015. At the heart of this massive scandal were vast sums of money and suspicious transactions, primarily from Russian and other ex-Soviet sources. The revelations not only shook Danske Bank's reputation but also exposed serious failings in the supervision and control systems within the European financial sector.

Sampo Bank buyout (2007): Laundering via Russian clients

The case has its roots in 2007, when Danske Bank acquired the Finnish Sampo Bank and, with it, its branch in Estonia. The acquisition brought a problematic portfolio of 'non-resident' customers – clients with no real connection to Estonia, mainly consisting of Russian companies and private individuals. It later emerged that this customer group was diverse, ranging from individuals with connections to Russian intelligence services and the political elite to organized criminal networks. This non-resident portfolio became an open conduit for vast flows of money from dubious origins.

Whistleblower alert: FSB and Putin ties ignored in 2013

As early as 2013, a British employee at Danske Bank's Estonian branch, whistleblower Howard Wilkinson, raised the alarm. In internal reports sent to the bank's headquarters in Copenhagen, Denmark, Wilkinson pointed out a series of highly suspicious conditions and transactions. He specifically warned about customers with suspected links to the Russian intelligence service FSB and individuals close to Vladimir Putin. Unfortunately, as later investigations revealed, Wilkinson's reports were not taken seriously by the bank's management in Copenhagen. This lack of response meant that the suspected money laundering and illegal activities could continue unhindered for years.

Fraud scale: €200 billion, shell firms and corruption

Between 2007 and 2015, over €200 billion flowed through the Estonian branch – a staggering amount that at the time exceeded Estonia's entire gross domestic product. These vast sums were channeled through an intricate network of shell companies, often registered in well-known tax havens such as Cyprus, Seychelles, and the British Virgin Islands, to obscure the money's origin. Internal investigations later revealed that a predominant part, perhaps even the entire non-resident portfolio, should have been considered suspicious. Nevertheless, the bank continued to service these customers and earn large sums from the transactions. US prosecutors, potentially with FBI involvement in the investigation, have since pointed out that up to 99% of the branch's profits originated from these high-risk customers. Meanwhile, reports suggested that bank employees in Estonia may have actively helped to circumvent internal control systems, raising questions about internal corruption.

System failure: Danish-Estonian regulatory disagreements

The problem of extensive money laundering was further exacerbated by poor coordination between the financial supervisory authorities in Denmark and Estonia. The respective national authorities disagreed on who bore the main responsibility for monitoring cross-border activities in the Estonian branch. This disagreement created a dangerous vacuum that allowed illegal money flows to continue unchecked for years.

Too late: Closed 2015, scandal 2017, revealing report

Only in 2015, due to growing international attention and pressure, did Danske Bank decide to shut down the controversial non-resident portfolio in Estonia. But by then, the damage was already done, and the scale of potential money laundering was immense. This financial scandal truly came to public attention in 2017, triggering a wave of investigations. A key internal report, prepared by the law firm Bruun & Hjejle in 2018, confirmed many of the serious systemic failures and warnings that the bank's management had previously ignored.

Consequences: DKK 15 billion fine, US/DK settlement

This massive scandal had far-reaching consequences. Danske Bank's share price plummeted, and the bank had to admit a total failure of its internal control systems. In December 2022, Danske Bank reached a comprehensive settlement with authorities in both the USA and Denmark. Here, the bank pleaded guilty to fraud against American investors. The settlement involved a total payment of over 15 billion Danish kroner (DKK) in fines and confiscation of profits from the illegal transactions involving extensive money laundering. Although Danske Bank as a company avoided a formal criminal conviction in this financial crime case, six former employees from the Estonian branch were charged in 2023 with laundering significant amounts of money.

Personal impact: Borgen's fall and Wilkinson's fight

The personal costs in the wake of the money laundering scandal were also significant. Thomas Borgen, CEO of Danske Bank during much of the period when the massive money laundering occurred, had to resign in 2018. Whistleblower Howard Wilkinson, who exposed the problematic conditions, subsequently faced threats and had to take extensive security measures for himself and his family after his identity was made public. The Danske Bank case today stands as a chilling example of the dangers of inadequate controls and the enormous costs that follow when profit is prioritized over compliance with anti-financial crime legislation.

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