In the latest salvo of cross-border probes over money laundering, The Wall Street Journal reported Friday (Sept. 14) that U.S. law enforcement agencies are examining Danske Bank over what has been termed “massive money laundering flows” from Russia and several former Soviet states.
The agencies probing the fund flows include the Securities and Exchange Commission (SEC), the Treasury Department and the Justice Department.
The WSJ said its information came from an unnamed source “familiar with the matter” in tandem with documents related to the probe that had been seen by the financial publication.
The probes are ongoing, and relate to transactions in turn tied to the bank’s Estonian branch – and focus on $150 million of money that made its way through accounts of non-Estonian holders.
The investigations join those being conducted from authorities based in other nations, including Denmark. Estonia is conducting its own investigation, and as CNBC reported, officials in that country are looking at two dozen Danske employees who had been based there. Those employees, in a roster that includes the branch's chief executive office, are accused of helping launder $230 million that came from Russia.
Two years ago, a whistleblower complaint filed with the SEC had identified Deutsche Bank and Citigroup as additional banks involved with the transactions that had flowed through the Estonian branch. Of those two banks, Deutsche had been handling wire transfers, acting as a correspondent bank. As for Citi, The WSJ reported, that bank’s Moscow office was connected to some transactions as well. Danske has its own investigation in place focused on the Estonian branch, and a report is slated to debut next week that details findings on money laundering.
On Friday, a spokesman for Danske said by email that “as a regulated business, we have interactions with authorities in various jurisdictions on an ongoing basis. However, as a general rule, we do not comment."
The WSJ noted that among discussions that took place during a visit to Estonia by Treasury Assistant Secretary for Terrorist Financing Marshall Billingslea, illegal fund flows from Russia were on the agenda. He also visited Denmark in August, noted the financial publication.
“There’s an enormous amount of money that is still being exfiltrated from Russia by both organized crime and cronies surrounding Putin,” he told a Senate panel in August.
The U.S. Treasury can take actions against those banks suspected of laundering money, and can restrict the supply of U.S. dollars that are directed to those banks. As The WSJ reported, this is known as a “death blow sanction” that can send a foreign bank into collapse.