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Danish bank pleads guilty to multi-billion dollar fraud scheme on U.S. Banks

<i>Ints Kalnins/Reuters</i><br/>On December 13
Ints Kalnins/Reuters
On December 13

By Hannah Rabinowitz, CNN

Federal prosecutors announced a plea deal and $2 billion forfeiture Tuesday with Danske Bank, one of Denmark’s largest banks, for illegally allowing foreign actors to funnel money through their branch in Estonia in order to gain unlawful access to the US financial system.

The guilty plea marks the end of a years-long investigation into the company after accusations that it funneled billions of dollars in illicit payments from high-risk clients, including in Russia, into countries including the United States.

Danske Bank agreed forfeit over $2 billion as part of the plea agreement, according to the Justice Department, which required the bank to plead guilty to one count of conspiracy to commit bank fraud.

In addition to the criminal guilty plea, the SEC announced a separate settlement with Danske Bank over the allegations of money laundering in which the bank agreed to pay approximately $413 million.

The Justice Department said that it will credit the bank approximately $850 million to settle other claims with SEC and the Danish authorities.

“Today’s guilty plea by Danske Bank and two-billion-dollar penalty demonstrate that the Department of Justice will fiercely guard the integrity of the U.S. financial system from tainted foreign money — Russian or otherwise,” Deputy Attorney General Lisa Monaco said in a statement Tuesday. “Whether you are a U.S. or foreign bank, if you use the U.S. financial system, you must comply with our laws… Failure to do so may well be a one-way ticket to a multi-billion-dollar guilty plea.”

The bank, according to the Justice Department, was aware of billions of dollars being funneled over an eight-year period through an Estonia branch into accounts in the United States and elsewhere without the proper anti-money laundering information about each account. The Estonia branch of the bank processed around $160 billion during that time period, prosecutors say.

The bank promised customers they could move money through an Estonia branch with little to no oversight, prosecutors allege. Bank employees in Estonia conspired with their customers, the department alleged, and helped “to shield the true nature of their transactions, including by using shell companies that obscured actual ownership of the funds.”

Though Danske Bank was aware the branch had potentially broken the law and was not meeting the standards of the company’s anti-money laundering program, executives overlooked the transactions and lied about information regarding Danske Bank Estonia’s customers and their risk profile.

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