Unraveling the $230 Billion Danske Bank Money-Laundering Scheme

Introduction

Danske Bank’s half-century reputation has been shattered by a massive money-laundering scheme involving over $230 billion. The scandal, which began in 2018, has led to the arrest of numerous individuals, including high-ranking executives and regulators.

The Scheme

The scheme was centered in Estonia and involved a complex web of shell companies and fictitious transactions designed to launder illegal funds through Danske Bank’s Estonian branch. According to reports, the bank’s lax anti-money laundering (AML) controls allowed the scheme to flourish, with some estimates suggesting that as much as 90% of the branch’s customers were engaged in suspicious activities.

The Investigation

The scandal began to unravel in 2018 when a whistleblower alerted regulators to potential AML breaches at the Estonian branch. An investigation by Denmark’s Financial Supervisory Authority (FSA) and Estonia’s Financial Inspection Authority (Finantsinspektsioon) uncovered a massive money-laundering scheme involving billions of dollars.

The Fallout

The fallout from the scandal has been severe:

• In May 2018, the bank’s CEO, Thomas Borgen, resigned amid allegations of AML breaches.
• In December 2018, Estonia arrested ten individuals in connection with the scheme.
• In February 2019, the country ordered Danske Bank to shut down its Estonian branch.
• In May 2019, former CEO Borgen was charged over money laundering allegations, and Denmark’s ex-finance regulator was also charged in connection with the scandal.

Calls for Reform

The scandal has led to calls for reform of both Danske Bank and the European banking regulatory regime. As one expert noted:

“This is the tip of the iceberg… Danske Bank’s scandal highlights the need for stronger AML controls and more effective regulation.”

Update: Charges Dropped, Prosecution Continues

In a shocking twist, it was revealed in February 2024 that all charges had been dropped against Danske Bank chiefs, and the bank’s former CEO was cleared in a $322 million investor lawsuit over the Estonia case. However, the bank still faces prosecution in the US for its role in the money-laundering scheme.

Conclusion

The full extent of the scandal remains unclear, but one thing is certain: Danske Bank’s reputation has been forever tarnished by this massive money-laundering scheme.