Erhvervs-, Vækst- og Eksportudvalget 2018-19 (1. samling)
ERU Alm.del Bilag 62
Offentligt
Money Laundering: What happened
in Estonia?
Presentation to the Business, Growth and Export Committee
Danish Parliament
19 November 2018
 ERU, Alm.del - 2018-19 (1. samling) - Bilag 62: Power Point præsentationer fra udvalgets høring om hvidvask den 19/11-18
1971690_0002.png
At least 10 banks were involved in the flow of
suspi ious o ey, i ludi g Da ske e tities…
Danske
Lithuania
US subsidiary of
European Bank
Where
did the
money
go?
Large Russian Bank 1
Large Russian Bank 2
Bank
customers
Russian subsidiary of
European Bank
Danske
Estonia
Danske
Denmark
Large US Bank 1
Russian subsidiary of
US Bank
Large US Bank 2
 ERU, Alm.del - 2018-19 (1. samling) - Bilag 62: Power Point præsentationer fra udvalgets høring om hvidvask den 19/11-18
1971690_0003.png
… ut e k o e y little a out hat these a ks
actually did about it
Bank
Danske Denmark
Danske Lithuania
Russian subsidiary of European bank
Russian subsidiary of US bank
US subsidiary of European bank
Large US bank 1
Large US bank 2
•
Da ish FSA report sa s that pa
What we know
e ts ere o l te h i al
-
Is this actually true?
•
Danske Bank commented in December 2017
•
Since then deathly silence
–
what happened?
•
No evidence that anyone has done anything
•
No evidence that anyone has done anything
•
Closed Da ske Esto ia s orrespo de t a ou t i
5
•
How many billions went through it up to 2015? What reports were made?
•
Asked Da ske Ba k ki dl to lose Esto ia s orrespo de t a ou t i
•
How many billions went through it up to 2013? What reports were made?
•
Closed Da ske Esto ia s orrespo de t a ou t i
5
•
How many billions went through it up to 2015? What reports were made?
 ERU, Alm.del - 2018-19 (1. samling) - Bilag 62: Power Point præsentationer fra udvalgets høring om hvidvask den 19/11-18
1971690_0004.png
I saw no indication that anything was wrong prior
to whistleblowing
June 2007
Feb 2012
Jun 2012
Apr 2013
Russian Central Bank
warning to Danish
FSA
Danish FSA
approaches Danske Bank
following contact from Estonian FSA
Danish FSA
reprimands Danske Bank for
AML failures
Danish FSA
contacts Danske Bank following
contact from Estonian FSA
Internal Audit
reports
Request by [large
US Bank 1]
that Danske
Estonia close its USD correspondent
account on the grounds of AML
Review of non-resident business
in Estonia
prepared
No discussion in Baltic Exco; no-one told me
No discussion in Baltic Exco; no-one told me
I was told that Estonia has best AML procedures in the group
No discussion in Baltic Exco;
After Da ske Esto ia s ra h held
never heard anything else
eeti g ith Esto ia FSA, I
Various
June 2013
Summarised in Baltic Exco; no special issues noted
It was communicated that this had nothing to do with specific
AML issues in Estonia
It i luded li e that It is ot just paper ork it is also ulture. If
e do t like hat e see, hear or feel, e e d the relatio ship.
Do t eed to ait for so ethi g hard efore a ti g.
Oct 2013
 ERU, Alm.del - 2018-19 (1. samling) - Bilag 62: Power Point præsentationer fra udvalgets høring om hvidvask den 19/11-18
1971690_0005.png
I made a total of four whistleblowing reports
First report
27 Dec 2013
One UK LLP
Second report
9 Jan 2014
Three UK LLPs
•
Included 2 of the 3 most profitable LLPs in Danske
Estonia
Twelve UK LLPs
•
Highly profitable for the bank
•
Had filed accounts with UK Companies House
•
All had registered office 175 Darkes Lane, Potters Bar,
UK
Danish K/S companies
Third report
19 Mar 2014
Fourth report
25 April 2014
 ERU, Alm.del - 2018-19 (1. samling) - Bilag 62: Power Point præsentationer fra udvalgets høring om hvidvask den 19/11-18
1971690_0006.png
… ut y Ap il
it as lea that the a k
intended to do nothing
While there have been investigations, letters and reports, I
note that, more than three months after my initial report:
•
No related client account has been closed by
management.
[Name deleted], which I flagged in
January, continues to turn over significant payment
volumes […]
•
There appears to have been no attempt by
management
to identify the full scope of the problem
of UK LLPs submitting false accounts […]
•
Only in the last two weeks has there apparently been
the realisation
that UK LLPs file accounts at all.
On the advice of legal counsel,
I […]
ask you to
confirm that the bank will undertake a full
investigation
to identify all current and past clients
structured through UK LLPs that appear to have
filed false accounts in the past or who are
identified as doing so in the future will be reported
to the FIU.
If I do not receive satisfactory confirmation
from
you by 15 April 2014,
it seems to me that the
correct course of action on my part is to make a
full report directly to FIU.
Extracts from my email to [names deleted 1-5], 8 April 2014
 ERU, Alm.del - 2018-19 (1. samling) - Bilag 62: Power Point præsentationer fra udvalgets høring om hvidvask den 19/11-18
1971690_0007.png
… a d a e ail f o Cope hage , looki g a k,
raises serious questions
[…] You ha e stated that the a k should ha e realised
that some customers were filing incorrect annual
report to UK Companies House and should have taken
action to report this.
A review has been undertaken of the Estonian customer
onboarding process and related KYC and AML processes.
This review indicated a need to consider increased
scrutiny of some offshore customers.
[…]
It is important to state that no breaches of Estonian law
We have taken proper legal advice and where we
have been indicated.
[…]
have found an obligation to make such reporting
–
and the customer has not already been investigated
–
Da ske Ba k […] ill u dertake a full re ie of the
filing has been made.
[…]
relevant existing customer base in order to correct any
outstanding shortcomings in
customer documentation.
We are closing accounts with related entities
(of
customers you have mentioned).
[…]
Extracts from email from [name deleted 1 and 2] to me, 15 April 2014
 ERU, Alm.del - 2018-19 (1. samling) - Bilag 62: Power Point præsentationer fra udvalgets høring om hvidvask den 19/11-18
1971690_0008.png
Also noteworthy was management inaction
regarding the illegal surveillance of me
It is totall u a epta le […] that [ a es
deleted 1-
] are tr i g to […]
review my
confidential communications with
internal auditors.
Here s so e e tra ts fro
the opinion of my legal counsel
[…]
•
Listening to recordings of telephone conversations
without the lawful right
to engage in surveillance may
constitute a criminal offence stipulated by §137 of the
Esto ia Pe al Code […]
•
Even if bank rules allow the employer to listen to
re ordi gs of its e plo ees […]
there must be
legitimate aim to do so
and it is hard to see a legitimate
aim in this matter.
Email from me to [name deleted 1-4]
10 April 2014
What did the
bank do?
Email from me to [name deleted], 24 April 2014
 ERU, Alm.del - 2018-19 (1. samling) - Bilag 62: Power Point præsentationer fra udvalgets høring om hvidvask den 19/11-18
1971690_0009.png
There was a curious lack of interest at a senior level
regarding problems with Danish K/S companies
This is a non-exhaustive extract from
the Estonian
customer list (of Danish K/S companies)
[…]
I would suggest that the bank be very careful about
having
non-resident customers from CIS banking in
Estonia Branch using K/S structures
[…]
There is significant reputational risk.
One might
consider going as far as instructing that no Danish legal
e tit e allo ed to set up a ou ts [… ] u less the
business genuinely carries out business (in Estonia).
E-mail from me to [two names deleted], 25 April 2014
53 customers
[…] ere i orporated as
Danish K/S
entities. All of these customers have been deemed
suspicious.
The 53 customers all shared addresses in
Copenhagen, and the vast majority of the entities also
shared the sa e dire tors. […]
Group Legal pro ided […] the full list of the allegatio s
by the whistleblower [...] (some) were
left out entirely,
including
[…]
allegations relating to K/S companies.
Danske Bank report, September 2018
 ERU, Alm.del - 2018-19 (1. samling) - Bilag 62: Power Point præsentationer fra udvalgets høring om hvidvask den 19/11-18
1971690_0010.png
Are these really the sort of companies Denmark is
seeking to attract?
The registration of a Danish K/S presents a fine
opportunity of
working with a fully tax-exempt
entity from a prestigious European country.
[…]
The Danish Limited Partnership (K/S) is an
excellent
option and vehicle
that may be used for trading,
especially when a
hite e tity
is needed.
Danish corporate tax is avoided completely
if there
are non-resident partners and if the Limited
Partnership trades solely outside Denmark.
Website of offshore company services provider
 ERU, Alm.del - 2018-19 (1. samling) - Bilag 62: Power Point præsentationer fra udvalgets høring om hvidvask den 19/11-18
1971690_0011.png
Conduct of Danish FSA officials raises serious
uestio s …
On 7 April 2013, Group Compliance & AML
contacted
ra h a age e t referri g to our la klisted Russia
usto ers .
It as added that
the Danish FSA is very worried because
they have confirmed to the US authorities that we comply
ith Da ish FSA s e ui e e ts o AML .
The FSA has
helped the Bank in a
critical situation.
They are now very
orried […]
September 2018 Danske Bank Report
Email from [name deleted] to [names
deleted], 7 April 2013
 ERU, Alm.del - 2018-19 (1. samling) - Bilag 62: Power Point præsentationer fra udvalgets høring om hvidvask den 19/11-18
1971690_0012.png
… e y se ious uestio s
I do t a e
in the slightest what happens in
Estonia.
My job is to protect Danske Bank.
Comments from [name deleted-1] to [name deleted-2], which [name
deleted-2] told me about in January 2015
 ERU, Alm.del - 2018-19 (1. samling) - Bilag 62: Power Point præsentationer fra udvalgets høring om hvidvask den 19/11-18
1971690_0013.png
It took almost 9 years from the first warning for the
Danish FSA to issue a reprimand
The bank received a
reprimand
[…]
for having failed in time
to
identify material money laundering risks at its branch in Estonia
and for having failed in time to introduce risk-mitigating measures
in this respect.
I theor , the super isio of the a k s foreig […] ra hes i the
AML area is the responsibility of the local authorities, but
the FSA
finds the circumstances identified at the branch constitute such a
material reputational risk to the bank that the FSA is looking into
the matter.
What did they find
he they looked i to
the atte i
6?
Danish FSA statement on the inspection of Danske Bank (AML
area), 16 March 2016
 ERU, Alm.del - 2018-19 (1. samling) - Bilag 62: Power Point præsentationer fra udvalgets høring om hvidvask den 19/11-18
1971690_0014.png
What really happened on Monday 12 March 2018?
[Name deleted] of
Danish
supervisory authority has
approached
me and asked whether
I k o our o ta ts. […]
Email from [name deleted] of
Estonian FSA to me on Friday, 9
March 2018 20:16 CET
Thanks.
Passed your details
to
[name deleted], who is
[deleted] of the Danish financial
super isor authorit […]
Email from [name deleted] of
Estonian FSA to me on Monday, 12
March 2018 06:51 CET
On 12 March 2018, the Danish FSA
sent a draft of (its) decision
to the
Board of Directors, the Executive
Board and the Chief Audit Executive.
Danish FSA report, 3 May 2018
 ERU, Alm.del - 2018-19 (1. samling) - Bilag 62: Power Point præsentationer fra udvalgets høring om hvidvask den 19/11-18
1971690_0015.png
The Non-Disclosure Agreement timeline
8 April
2014
28 April
My warning
that I would make my own report to the
Estonian FIU
NDA signed
- disclosing information to
anyone
not allowed
u less
e ui ed y la
28 June
25 July
29 October
Limited waiver to talk to
Danish FSA
Limited waiver to talk to
Danish FSA and Estonian FSA
Limited waiver to talk to
the US DoJ
and
SEC
29 October
2018
29 October
Limited waiver to talk to
Danish Parliament
and
European
Parliament committees
Limited waiver to talk to
SOIK
possi l i the prese e of
foreign police or prosecution authorities cooperating with
SOIK
No waiver to talk to the Estonian prosecutor
 ERU, Alm.del - 2018-19 (1. samling) - Bilag 62: Power Point præsentationer fra udvalgets høring om hvidvask den 19/11-18
1971690_0016.png
Never standing in the way
[..]
Should I wish to make a criminal complaint
to your
SOIK about crimes committed by Danske Bank,
I would
have to seek permission from the bank
to do so […]
Email from me to Danish FSA 10 July 2018
The bank is perplexed
as to why it is necessary for Mr
Wilkinson to have such a
broad scope
prior to initiating
talks with the Danish FSA
Did the Danish FSA
get involved?
Attributed to the bank in email from Danish FSA to me,
31 July 2018
 ERU, Alm.del - 2018-19 (1. samling) - Bilag 62: Power Point præsentationer fra udvalgets høring om hvidvask den 19/11-18
A laundry list for Denmark
•
Ban NDA clauses
that prevent disclosure of wrongdoing to the
authorities
•
Protect whistleblowers
•
Fo ally i estigate i depe de tly the FSA s
regulation
of Danske
Bank in relation to Estonia from 2007 onwards, including considering
whether there was misconduct by senior officials
•
Fix K/S problem
–
past, current and future