The Danske Bank money-laundering scandal widened after whistleblower Howard Wilkinson told a Danish parliamentary hearing that a major European bank helped process up to $150 billion in suspicious payments tied to the lender’s Estonia branch.
Wilkinson, who ran Danske Bank’s trading unit in the Baltics from 2007 to 2014, did not identify the institution. But Reuters sources said Deutsche Bank, JPMorgan and Bank of America cleared dollar transactions for the Estonian branch, with one source saying JPMorgan ended its correspondent relationship with the Tallinn branch in 2013. All three banks declined to comment.
Authorities in Denmark, Estonia, Britain and the United States were already investigating payments totaling 200 billion euros, or $228.5 billion, that moved through Danske’s small Estonian branch between 2007 and 2015. Wilkinson said the money appeared to have passed through the U.S. banking system after the last checks by the large banks.
“I would guess that $150 billion went through this particular bank (the large European bank) in the U.S.,” he told lawmakers. He added: “No one really knows where this money went. All we know is that the last people to see it was these three large banks in the U.S. They were the last check, and when that failed, the money was into the global financial system.”
Interim chief executive Jesper Nielsen said the affair had damaged Danske Bank’s standing. “We have breached the expectations society had of us. The case and the course of events around it does not reflect the bank we want to be,” he said after Wilkinson’s testimony.
Wilkinson also said he had been offered cash by Danske Bank not to speak out. He said he later received a waiver last month allowing him to speak to some U.S. authorities, but doubted the “dirty money” would ever be traced. “There is no chance in the world... that any of that money is ever going to be tracked down and that any criminals lose a single cent,” he said.
Management scrutiny and earlier warnings ¶
Danske Bank has admitted that its anti-money-laundering controls in Estonia were inadequate, though a report it issued in September said its board, chairman and chief executive had not breached legal duties. Wilkinson said an earlier whistleblower warning had been sent to the executive board, group compliance and the internal auditor at the end of December 2013.
He said that by April 2014 it was clear to him the bank did not intend to act. “There was a curious lack of interest at senior management level,” he said. Wilkinson also said he reviewed the three most profitable accounts involving British limited liability partnerships at the start of January 2014 and found they were all fake, shared the same North London registered office, and were still open by April.
“I warned them (Danske) that if they didn’t do a proper investigation and make the appropriate report to the police, then I was going to do it myself,” he said.
Danske’s September report said no “red flags” were passed to former chief executive Thomas Borgen, who held ultimate executive responsibility for Estonia from 2009 to 2012. Borgen later stepped down, saying he had been “cleared from a legal point of view” but still carried “the ultimate responsibility”.
Wilkinson said Denmark’s financial regulator, the FSA, did not contact him before issuing its own report in May 2018 and should be investigated over its role. The FSA said in May that it had not found enough basis to open cases against members of Danske Bank’s management.
Danish business minister Rasmus Jarlov said on Twitter that if Wilkinson could not speak freely to Danish authorities without risking prosecution, that had to change. He called for a thorough investigation so officials could obtain the information they needed.
The scandal emerged alongside a major government tax scandal and a fraud case in Denmark’s ministry for social affairs, adding pressure on institutions already facing public distrust.
