Banking

Danske Scandal Could Involve US Banks

Danske-Bank

A lawyer for the whistleblower in the Danske Bank money laundering scandal warns that investigators should look into whether major Western banks were involved.

Stephen Kohn, who is representing Danske whistleblower Howard Wilkinson, told Reuters that Danske may be only a small player in the scandal.

“It looks like the tip of the iceberg,” he said. “The problem is far bigger than has been reported … If this is properly investigated, and the money followed all the way to the end — it all went to large, multinational Western financial institutions, and either the U.S. government or other authorities have the ability to track down every transfer and any account.”

Reuters noted, however, that Kohn did not provide any evidence of the allegation.

Danske Bank, Denmark’s largest bank, is being investigated over what has been termed “massive money laundering flows” from Russia and several former Soviet states. The agencies probing the alleged incident include the Securities and Exchange Commission (SEC), the Department of the Treasury and the DOJ. The probes are ongoing and relate to transactions tied to the bank’s Estonian branch — and focus on $150 million that made its way through accounts of non-Estonian holders.

In September, Danske’s CEO Thomas Borgen announced that he would be stepping down. Analysts expect fines to be anywhere from $600 million to billions of dollars if the U.S. decides to institute fines as well.

Wilkinson, a British former head of markets in Danske’s Estonian branch until 2014, helped reveal how the non-resident money flowed through the tiny branch between 2007 and 2015.  His attorney noted that whistleblowers are at a greater risk of retaliation, and that Wilkinson “has interacted with law enforcement” and is satisfied with their response. Kohn also believes that whistleblowers need to be financial rewarded for the risk that they take. He already won a $104 million reward in 2012 for whistleblower Bradley Birkenfeld, the man who lifted the lid on tax evasion facilitated by UBS.

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