On September 19, 2018, news broke of a $234 billion money laundering scheme. The scheme moved rubles out of Russia, converted them to dollars at the Estonian branch of Danske Bank, and then moved the dollars to New York with the assistance of three correspondent banks (Bank of America, J.P Morgan, and Deutsche Bank). Danske Bank admitted all of its internal controls designed to prevent money laundering had failed. The bank also revealed that the scheme had been reported to the highest levels of the bank by a whistleblower over four years before. The whistleblower’s identity was required to be secret. But it took only days for his name to leak out.
Soon the entire international banking world learned that the former Danske Bank manager Howard Wilkinson had exposed the largest money laundering scheme in history, and that the bank had tried to cover it up.
He confidentially disclosed his finding up the chain of command and within the top corporate offices of the Bank in Copenhagen. His reports triggered a high-level audit. It did not take long for internal auditors to validate his concerns.
But the auditors never issued their reports, and the bank started to cover-up its crimes. By April of 2014, just four months after his first reports were filed, Wilkinson resigned from the bank for ethical reasons – he could not stay working for an institution potentially involved in massive illegal conduct. Despite being an exemplary employee, Danske Bank had no problem showing him the door and having him sign a highly restrictive nondisclosure agreement as a condition for obtaining his severance pay. Wilkinson left Estonia with his family. He returned to his native England. His career in international banking was over.
Slowly news of the scandal started to leak out. Danske Bank hired an outside law firm ( Brunn & Hjejle) to conduct a review of its conduct. When it was ultimately released to the pubic in September 2018 the lawyer’s report shocked the banking world:
The report confirmed the role of Mr. Wilkinson:
“It was a whistleblower . . . that made [the Bank] realize that AML procedures . . . had been manifestly insufficient and inadequate and that all three lines of defense . . . had failed.”
It disclosed what Wilkinson’s reported in his first disclosure to the Bank’s top leadership:
“’[T]he bank knowingly continued to deal with a company that had committed a crime.’”
“’The bank continued dealing with [a] company even after it had committed another crime by submitting amended false accounts.”
It was then reported that Wilkinson had informed the Bank that high levels of the Russian government were apparently involved:
“The whistleblower reported to management that one of the suspicious accounts ‘apparently . . . included the Putin family and the FSB’, that is the Russian Federal Security Service).”
The Bank’s lawyers then conceded that the internal controls designed to detect and prevent money laundering had failed to work:
“[M]ajor deficiencies in controls and governance made it possible to use Danske Bank’s branch in Estonia for criminal activities such as money laundering” and that “there wasno reporting to authorities.” The “the allegations brought forward by the whistleblower were not properly investigated.”
The lawyer’s report vindicated the whistleblower. Consistent with European privacy laws, the report did not name Mr. Wilkinson, who had remained completely out of the public eye. But his identity was illegally leaked out within days of the report’s release. Thereafter a number of highly respected media outlets, including the Wall Street Journal, and the TV-news magazine, 60 Minutes. Mr. Wilkinson and his counsel testified before both the Danish and European Parliaments.
Although the scope of the ongoing ongoing investigations into the Danske Bank money laundering scheme is not public, in Europe, a number of criminal cases have been filed, top level managers have resigned, and the Estonian branch of the Danske Bank was closed. Moreover, other major international banks involved in the scandal have been raided by police and subjected to intense civil and criminal investigations. Reuters reported that Deutsche Bank was added to the list of potential targets in an expanding U.S. Department of Justice investigation into the Danske scandal: “The U.S. Department of Justice has in recent weeks stepped up its investigation into Deutsche Bank’s role in the 200 billion euro ($220 billion) Danske Bank money laundering scandal. . . . Officials from the DoJ, who have been working closely with Estonian prosecutors for around a year, have also begun cooperating with Frankfurt state prosecutors.”
Howard Wilkinson is the subject of a CBS: 60 Minutes segment featuring highlights of this case. The CBS show Whistleblower featuring Howard Wilkinson aired on Thursday, May 16, 2019 and is now available to watch online.
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