Crediting an “internal whistleblower” who assisted in a lengthy investigation, the U.S. Department of Justice announced a $2 billion forfeiture by Denmark’s largest bank to settle allegations of bank fraud related to money laundering. In a press release dated Tuesday, December 13, 2022, the DOJ revealed that Danske Bank had pleaded guilty to charges it had engaged in a fraud scheme that allowed customers who were at high-risk of violating U.S. anti-money laundering laws to access the American financial system.
Many of those customers who had accounts in Estonia actually resided outside that country in nations that included Russia. The DOJ also stated that the Securities and Exchange Commission had reached a separate settlement in “a related, parallel proceeding.” Under those terms, “Danske Bank agreed to pay approximately $413 million… as well as disgorgement” of ill-gotten profits.
The press release quotes Deputy Attorney General Lisa O. Monaco, who said, “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.” U.S. law requires banks to adopt rigorous controls to deter money laundering, thereby preventing criminal enterprises from evading taxation and corrupting the legitimate economy. Assistant Attorney General Kenneth A. Polite, Jr. of the Justice Department’s Criminal Division said, said. “Danske Bank lied to U.S. banks about its deficient anti-money laundering systems, inadequate transaction monitoring capabilities, and its high-risk, offshore customer base in order to gain unlawful access to the U.S. financial system.”
Facts Reveal a Broad Conspiracy to Evade Banking Laws
The facts of the case indicate that “between 2008 and 2016, Danske Bank offered banking services through its branch in Estonia, Danske Bank Estonia” to “non-resident customers known as the NRP.” Danske Bank Estonia allegedly built its NRP customer base “by ensuring that [NPRs] could transfer large amounts of money … with little, if any, oversight.” In other words, Danske Bank Estonia conspired with mobsters to facilitate shady transactions. During the time in question, “Danske Bank Estonia processed $160 billion through U.S. banks on behalf of the NRP.”
Considering the profit that Danske must have made on $160 billion in transactions, $2 billion might seem like a slap on the wrist. The Danske website states, “We have revised the outlook for net profit of DKK 10-12 billion to a net loss better than DKK 5.5 billion due to the additional provision for the Estonia matter and the goodwill impairment charge.” Thus, the resolution of these charges seems to have caused a negative swing of DKK 17.5 billion ($2.5 billion). For a bank with assets as of 2021 estimated at just below DKK 4 trillion, this slap shouldn’t sting terribly much.
The ALMA Whistleblower Program
Just the same, the whistleblower might enjoy a robust payday. When Congress passed the Anti-Money Laundering Act of 2020, it established a whistleblower reward program at the Department of the Treasury’s Financial Crimes Enforcement Network. The AMLA program was modeled on the successful Dodd-Frank SEC whistleblower program, which enables whistleblowers to collect rewards ranging from 10 to 30 percent of the amount the government recovers through its enforcement action. To qualify, a whistleblower must voluntarily come forward with unique information that contributes to a recovery of $1 million or more for the government.
The DOJ did not announce whether any whistleblower in this case will get a reward. But, in this case, there are opportunities for rewards from the AMLA and SEC programs. Considering the amounts recovered, $2 billion and $413 million, respectively, the rewards could be substantial.
Like the SEC program, the AMLA program also protects whistleblowers from retaliation for disclosing violations of U.S. banking law. The AMLA creates a private right of action that allows individuals who report fraud to sue for damages due to unlawful retaliation.
Money laundering is a huge problem, because it rewards illegal activities, such as drug trafficking, human trafficking, and gun running, which are terroristic in nature and undermine civil society across the globe. Enriching bad actors empowers them to corrupt virtually every institution of our civil society, from free markets to federal, state, and local government. Whistleblowers who come forward to report money laundering violations are true heroes who deserve whatever reward they’re given.
If you have information about bank fraud or another violation of U.S. law, speak to an experienced and knowledgeable whistleblower attorney at our firm today. Call us today at 800.669.7782 or contact us online.