STOCKHOLM (Reuters) - Several European banks are facing allegations of being involved in a Baltic money laundering scandal and failing to prevent tainted Russian money from flowing through their branches across the world.
The scandal first came to light via investigations by U.S. authorities into Latvia’s ABLV bank, which they accused of institutionalised money laundering, and Pilatus Bank in Malta, whose chairman was charged in the United States over money laundering and bank fraud.
The first major bank to face questions, however, was Danske Bank, when Danish newspaper Berlingske said in 2017 a whistleblower had raised suspicions over the origins of billions of euros that had flowed through the Estonian branch of the Denmark’s biggest bank.
Since then, a number of other European banks have been drawn into the scandal by various media organisations and a collective of European news outlets called the Organised Crime and Corruption Reporting Project (OCCRP).
Another central player in the saga is Bill Browder, a critic of Russian President Vladimir Putin who has successfully lobbied for U.S. sanctions against Moscow over the killing of his lawyer Sergei Magnitsky in 2009.
Browder has brought criminal complaints against banks in various countries, including the United States, over alleged money laundering relating to a tax fraud exposed by Magnitsky.
Denmark’s biggest bank admitted in September that 200 billion euros ($226 billion) of suspicious transactions originating from Russia, former Soviet states and elsewhere flowed through its Estonian branch between 2007 and 2015.
The bank is being investigated by the U.S. Department of Justice and the U.S. Securities and Exchange Commission, as well as authorities in Denmark, Estonia, Britain and France.
Browder has been key to triggering some of these investigations, having most recently filed a criminal complaint with U.S. authorities.
Money laundering could have occurred in relation to at least 40 billion Swedish crowns ($4.3 billion) transferred between Baltic accounts at Swedbank and Danske between 2007 and 2015, Swedish TV alleged on Feb. 20.
Sweden’s and Estonia’s financial watchdogs have opened a joint investigation into Swedbank, while Lithuania’s financial regulator is separately examining Swedbank’s local operations.
Browder is planning to file criminal complaints against Swedbank in several countries where it has operations, starting with a complaint with Swedish authorities.
Swedbank has hired external investigators to look into the matter. Its CEO Birgitte Bonnesen has said she is confident about the bank’s actions to prevent money laundering but could not promise that nothing had slipped through the net.
The Nordic region’s largest bank handled about 700 million euros in suspicious transactions between 2005 and 2017, with funds heading to shell companies in countries such as the British Virgin Islands and Panama, a Finnish broadcaster alleged on March 4.
The bank said the information in the report had been covered previously and when it found suspicious behaviour it reported it to the relevant authorities. “We recognise that our systems in the past may not have been robust enough to counter this sort of financial crime. For that we are truly sorry,” the bank said.
Browder filed complaints against Nordea with authorities in Sweden, Denmark, Norway and Finland in October. Sweden decided not to investigate, but Finland and Norway are yet to give any update. Danish police had already started an independent investigation in 2016 after the Danske scandal broke.
Nordea was in 2015 fined 50 million Swedish crowns, the maximum penalty at the time, by the Swedish regulator for breaching anti-money laundering and financing of terrorism rules.
Germany’s biggest bank helped to process the bulk of the payments involved in Danske’s money laundering scandal, a source with direct knowledge of the case said on Nov. 21. It was also named as a receiving counterparty to potential money laundering transactions in an OCCRP report on Monday.
A Deutsche Bank spokesman confirmed to Reuters that it acted as a correspondent bank for Danske Bank in Estonia, but said it ended the relationship in 2015 after identifying suspicious activity.
On Nov. 19, the bank’s regulation chief said it played only a secondary role as a so-called correspondent bank to Danske Bank, limiting what it needed to know about the people behind the transactions.
Germany’s financial watchdog in September ordered Deutsche Bank to do more to prevent money laundering and “terrorist financing”. The bank has publicly said it agreed it needed to improve its processes to properly identify clients.
The bank has also been fined reut.rs/2tTuDwD nearly $700 million for allowing money laundering through artificial trades between Moscow, London and New York and an investigation by the U.S. Department of Justice is ongoing.
The French bank, through its private banking subsidiary Indosuez, has allegedly been involved in money laundering, French newspaper Les Echos said on Tuesday, saying it was among the banks mentioned in Monday’s OCCRP report.
The OCCRP said its report was based on leaked documents detailing transactions worth more than $470 billion sent in 1.3 million transfers from 233,000 firms.
A Credit Agricole spokeswoman said its Indosuez unit had “fulfilled all its obligations regarding anti-money laundering” when asked about the matter.
The Netherlands’ largest financial services provider admitted on Sept. 4 that criminals had been able to launder money through its accounts and agreed to pay 775 million euros to settle the Dutch case.
The bank was aware of the potential involvement in money laundering to the tune of hundreds of millions of euros by one of its clients at its Moscow branch, newspaper Trouw reported, citing Monday’s OCCRP report.
ING said the bank always takes such allegations seriously, but could not comment on the specifics of the report.
Browder’s company filed a report in February to Austrian prosecutors containing allegations the bank was the top recipient in a list of 78 banks in Austria that received funds allegedly linked to money laundering.
RBI, one of the biggest foreign lenders in Russia, was also named in Monday’s OCCRP report, which alleged the bank was a counterparty in a money laundering scheme.
The bank said it was “not familiar with the concrete allegations and does not have any further information on the content of the complaint”.
“RBI takes the allegations in the media very seriously and is conducting an internal investigation,” it said.
Austrian anti-corruption prosecutors said they were examining money-laundering allegations after receiving a complaint against unknown parties, a spokeswoman said.
Monday’s OCCRP report also named Dutch lenders ABN Amro and Rabobank as having facilitated several hundred million euros in improper payments and said counterparties on these transactions included U.S. bank Citigroup.
Majority state-owned ABN Amro, which in February said it had stepped up efforts against money laundering and other criminal activities, said the reports were not related to its business now.
Rabobank, which was fined 1 million euros in February by the Dutch central bank for failing to catch money laundering by clients, said it would not comment on specific transactions. It said it adheres to international anti-money laundering rules.
Royal Bank of Scotland (RBS), which acquired a business from ABN Amro in 2008, said it could not comment on specific transactions but took allegations of money laundering seriously.
“We are committed to combatting financial crime and money laundering in line with our regulations and have controls and safeguards in place to identify, assess, monitor and mitigate these risks,” RBS said in a statement.
Citigroup declined to comment on the report.
Reporting by Esha Vaish in Stockholm; Editing by Mark Potter