Danske Bank

In this week’s Financial Crime Wave, the whistleblower who alerted Danske Bank, authorities about its potential money laundering problem emerges, Dutch regulator chastises banking sector for lax stance on anti-money laundering compliance in wake of record nearly $1 billion penalty against ING, and more.


Whistleblower at Danske Bank was firm’s Baltics trading head, attempted to warn of massive laundering scandal now topping $230 billion

The internal whistleblower who helped reveal alleged money laundering at Danske Bank’s Estonian branch was reportedly a British former head of its trading business in the Baltics, a new revelation in a potentially record illicit finance scandal that has soared past the $200 billion mark, tarrying a country’s and bank’s reputation. Howard Wilkinson headed the bank’s Danske Markets trading unit in the Baltics from 2007 to 2014 and confirmed his role in an email to Danish newspaper Berlingske, after he was named by Estonian media. Berlingske has published a series of revelations in the developing Danske Bank scandal, which may prove to be the largest money-laundering operation in history.

Danske Bank’s chief executive, Thomas Borgen, resigned last week after an inquiry revealed that €200bn of payments, many of which the bank said were suspicious, had been moved through its Estonian branch over a period of eight years. Wilkinson warned Danske Bank’s executive board in Copenhagen in 2013 and 2014 about suspicious activities at the Estonian branch, reported Berlingske, which said it has been in contact with him for months. Last week the bank said an independent investigation had found “a series of major deficiencies” in its controls to prevent money laundering. The investigation found that more than half of Danske’s 15,000 customers in Estonia were suspicious, (via The Guardian). To read ACFCS coverage of the scandal, click here.

Human trafficking

New initiative formed to tackle human trafficking, modern day slavery by better parsing out financial sector nexus points, red flags, with goal to develop stronger countermeasures

Answering calls by top global watchdog groups and spearheaded by some of the brightest minds in financial crime compliance circles, the Financial Sector Commission on Modern Day Slavery and Human Trafficking was recently established in response to increased attention from the UN Security Council, Financial Action Task Force and G-20 to the role of the financial sector in tackling modern slavery and human trafficking. Between September 2018 and July 2019, the Commission will consult with experts and stakeholders to develop an evidence-based roadmap for accelerated action by the global financial sector, addressing risk and compliance, lending and investment, and innovation. The Liechtenstein Initiative aims to put the financial sector at the heart of global efforts to protect human rights – especially those of women and girls – and end modern slavery. The group is packed with top financial crime and compliance veterans and thought leaders, including ACFCS Advisory Board Member, Barry Koch.

The Commissioners will discuss the sector’s approach to anti-slavery and anti-trafficking compliance; responsible investment and lending practices; and financial sector innovation to address modern slavery and human trafficking. Together, the Financial Sector Commission will consider a concrete roadmap to accelerate action by the financial sector in combatting this $150 billion industry. The Liechtenstein Initiative responds directly to calls from the United Nations Security Council for States and the financial sector to tackle modern slavery and human trafficking, as well as a commitment by the G-20 in July 2017 to do the same. 193 States made a similar commitment in September 2015 when they pledged to take immediate and effective measures to end modern slavery and human trafficking by 2030, as part of the 2030 Agenda for Sustainable Development. The project was developed by the Government of the Principality of Liechtenstein with the Australian Government and Centre for Policy Research at United Nations University, in partnership with a consortium of banks, philanthropic foundation, banking associations and other partners, (via the Commission).


More Dutch banks are not taking money laundering seriously: central bank

Banks in the Netherlands are still too lax when it comes to spotting and preventing money laundering, the Dutch central bank has told finance minister Wopke Hoekstra. The central bank was responding to questions about the €775 million out of court settlement reached by ING with the public prosecution department for allowing money laundering to go on unimpeded for several years. The central bank said in a briefing to Hoekstra that ING is not the only bank to get it wrong.

“Banks too often are not carrying out their gatekeeper function properly,” the central bank said. “Despite measures to ensure this and additional emphasis on the rules and regulation, the central bank notes that difference financial institutions are not taking their responsibilities sufficiently seriously,” the statement said. In particular, the central bank said executives should become more involved in anti-money laundering strategy and that they should give a “personal commitment” to making sure the bank was not involved in fraud or economic crime. Hoekstra, in his note to MPs, said he agreed with the recommendation. “Culture begins at the top, with the management board,” he said, (via Dutch News).


So what does ‘award-winning’ compliance training look like?

Well, if you are MasterCard, it looks like a film about a former FCPA violator turning away from the dark side. You can get a snippet of it courtesy of the FCPA blog, (via the FCPA Blog).


Global financial institutions fined $26 billion for non-compliance in past decade, U.S. most aggressive AML watchdog

The US accounts for nearly 44 percent of all global regulatory anti-money laundering (AML) and know-your-customer (KYC) fines, yet almost 91 percent of the total value ($23.52 billion), according to Fenergo, a client lifecycle management solutions firm. The findings are part of a study carried out by Fenergo detailing the global fines activity of regional and in-country regulators over the past 10 years. It also highlights how regulators have approached breaches from foreign versus domestic financial institutions.

A staggering $26 billion in fines has been imposed for non-compliance with AML, KYC and sanctions regulations in the last decade, Fenergo found. Fenergo said: “The US Department of Justice is the most punitive regulator in the world when it comes to imposing financial penalties for non-compliance”, levying half of the global AML/sanctions fines amount, nearly $14 billion. This was followed by the New York Department of Financial Services imposing financial penalties totaling $3.6 billion, (via Asset Servicing Times).


Quick rundown of 1MDB scandal and how aftershocks are still making global banks quake with fear

How Malaysia’s 1MDB scandal shook the financial world, a quick primer on who, what, where, when and, most importantly to financial crime compliance officers and investigators, how, (via Bloomberg).

Individual liability

EU looking to yank bank’s license after chairman arrested on money laundering charges

In a further showing that not just regulators in the U.S. are cracking down on bank compliance breakdowns, Europe’s banking watchdog has backed a recommendation by the Maltese financial regulator to withdraw Pilatus Bank’s banking license following the indictment of its chairman for money laundering, (via Reuters).

Virtual currencies

Can a virtual currency be created with AML KYC controls already baked in? Yes, says one company

New developments in the world of virtual currency and financial crime compliance as the AML Bitcoin, touting its ties as the “world’s first patented AML and KYC compliant cryptocurrency,” gets its moment to shine in front of global fincrime watchdog and standard setter FATF, (via AML Bitcoin).


Quebec facing harsh criticism for risky program that allows wealthy investors to pay for citizenship as many applicants have lied about ownership, assets

In yet another slight to Canada’s counter-crime countermeasures, some rich foreigners seeking Canadian residency under a special Quebec program for wealthy investors couldn’t point to the province on a map, while others submitted fake documents or disguised their assets — yet many of them were still accepted for immigration, former civil servants say. The officials, charged with administering the Quebec Immigrant Investor Program (QIIP), say they were sometimes pressured into ignoring signs that applicants’ fortunes were founded on corruption or other ill-gotten gains, (via the CBC).

North Korea

North Korea likely turning to virtual value to evade U.S., global sanctions, say experts

North Korea is increasingly using crypto-currencies to successfully circumvent US sanctions, according to two Washington-based experts, (via the Asia Times).


Congress and cryptos converged recently as companies query lawmakers for guidance on regulations

Some 80 representatives from the cryptocurrency and traditional finance industries trekked to Washington, D.C. on Tuesday with a singular message for U.S. lawmakers: we need regulatory clarity on cryptocurrencies and initial coin offerings (ICOs). That message was fully on display during the “Legislating Certainty for Cryptocurrencies” event held this week at the Library of Congress. Over the course of the morning and early afternoon, stakeholders outlined the difficulties they face when launching projects and products in the U.S. The culprit behind their woes: uncertainty as to when cryptocurrencies are treated as securities and how startups should approach compliance more broadly, (via Coin Desk).

Real estate

Hackers more aggressively targeting real estate sector in BEC attacks, can make millions with single scheme

With the sector in many instances having less secure systems than their banking brethren and believing it’s not a target, the real estate sector is reeling from devastating business email compromise hack attacks, with the ability to pilfer millions in one incursion. One example: James and Candace Butcher were ready to finalize the purchase of their dream retirement home, and at closing time wired $272,000 from their bank following instructions they received by email. Within hours, the money had vanished. Unbeknownst to the Colorado couple, the email account for the real estate settlement company had been hacked, and fraudsters had altered the wiring instruction to make off with the hefty sum representing a big chunk of the Butchers’ life savings, according to a lawsuit filed in state court.

A report by the FBI’s Internet Crime Complaint Center said the number of victims of email fraud involving real estate transactions rose 1,110 percent between 2015 to 2017 and losses rose nearly 2,200 percent. Nearly 10,000 people reported being victims of this kind of fraud in 2017 with losses over $56 million, the FBI report said. The Butchers, forced to move into their son’s basement instead of their dream home, eventually reached a confidential settlement in a lawsuit against their real estate agent, bank and settlement company, according to their lawyer Ian Hicks. The problem is growing as hackers take advantage of lax security in the chain of businesses involved in real estate and a potential for a large payoff, (via AFP).

New York

NYAG’s office finds AML, fraud control gaps at crypto exchanges in virtual market integrity report as U.S. grapples with how best to regulate nascent sector 

The New York Attorney General recently issued a report reviewing major cryptocurrency exchanges as a part of its Virtual Markets Integrity Initiative – a move presaging more forceful regulation for the space, though regulators the world over are still grappling with how to craft compliance and exam structures for operations that can transact anywhere with customers they may have never even met.

While crypto exchanges have become very tech savvy, employing anti-money laundering (AML) tactics and even artificial intelligence to gauge risk and monitor transactions, the report still found deficiencies in practices at the major exchanges relative to best practices found at traditional exchanges. This isn’t surprising, one might imagine, perhaps given the emerging nature of the space, but does highlight some of the issues virtual value operators will likely need to rectify in the future.

Some of the key findings of the report are:

  • KY(See-ya): Platforms that have implemented a Know Your Customer (KYC) program will engage in various measures to confirm a new customer’s identity before permitting certain types of trading. The OAG nonetheless found that virtual asset trading platforms differ significantly in how they confirm identity and enforce their site access policies. Most participating platforms require customers to submit a range of personal identifying information and government-issued identification before allowing new customers to trade. Bitfinex and Tidex do not, requiring little more than an email address to begin trading virtual currencies.
  • Role play: The various roles the crypto exchanges play can create potential conflicts of interest.
  • Tempting trades: Efforts to stem abusive trading are generally insufficient to date.
  • Audit not it: Protection for customer funds is limited, with lack of common auditing standards highlighted in particular, (via the NYAG).


First new U.S. government cybersecurity strategy in more than a decade focuses on more rigorous defense, more aggressive offense to punish hackers, foreign adversaries

The public and private networks of America’s networks are threatened daily by criminals, terrorists, and foreign adversaries. In the face of growing threats, the Federal Government has the responsibility to do its part to ensure America has the best cybersecurity in the world. Failures to prioritize cybersecurity by both government and industry have left our Nation less secure, according to the White House.

As a result, the President last week signed the National Cyber Strategy—the first fully articulated cyber strategy for the United States since 2003. These are the key tenets on which we build this National Cyber Strategy:

  • Protection: Take specific steps to secure Federal networks and information, secure critical infrastructure, combat cybercrime, and improve incident reporting.
  • Promotion: Support a vibrant and resilient digital economy, foster and protect American ingenuity, and develop a superior cybersecurity workforce.
  • Disruption: We will identify, counter, disrupt, degrade, and deter behavior in cyberspace that is destabilizing and contrary to our national interests. Enhance cyber stability through norms of responsible state behavior, attribution of unacceptable behavior in cyberspace, and the imposition of costs on malicious cyber actors.
  • Preservation: Preserve the long-term openness, interoperability, security, and reliability of the Internet, while supporting market growth for infrastructure and emerging technologies and building cyber capacity internationally, (via the White House).



Global AML watchdog levels harsh criticism against Saudi Arabia in countrywide review, noting significant weaknesses in terror finance tracking, investigating, prosecuting large, complex laundering cases

Saudi Arabia has been strongly criticized for its failure to tackle money laundering and international terrorism financing in a new report which will make uncomfortable reading for the authorities in Riyadh. A report published on September 24 by the Financial Action Task Force (FATF) – an intergovernmental body based in Paris – said “Saudi Arabia is not effectively investigating and prosecuting individuals involved in larger scale or professional [money laundering] activity” and is “not effectively confiscating the proceeds of crime”.

It also pointed to the lack of attention paid to financing of terrorist groups outside the country. While acknowledging that prioritizing domestic concerns is “understandable,” the report also said “the almost exclusive focus of authorities on domestic [terrorist financing] offences means the authorities are not prioritizing disruption of [terrorist financing] support for threats outside the kingdom,” (via Forbes).

Money laundering

One man with ties to Russia, Malta and Finland is allegedly at the center of a more than $10 million international money laundering scheme exploiting AML gaps in real estate sector

A Russian national with a Maltese passport is reportedly part of a €10m international laundering racket in south-west Finland.Finnish police raided over the weekend a real-estate agency known as Airiston Helmi, which sold properties in Finland’s Turku archipelago.

Finnish state media outlet YLE on Monday (24 September) reported the Airiston Helmi chair of the board is a Russian national with Maltese citizenship. It said millions of euros worth of properties were acquired through business purchases given Airiston Helmi’s registry does not identify the buyer, a common method to launder money, (via the EU Observer).


German regulator takes ‘unprecedented’ step to improve Deutsche Bank AML controls, orders compliance monitor

Germany’s top bank, even after boosting spending and talent to strengthen financial crime compliance controls in recent years is still being chastised by regulators, with the rare step of its home country authority assigning a dedicated, on-the-ground sentinel: the corporate monitor. In the latest reprimand, the German markets regulator on Monday said it ordered Deutsche Bank to improve money-laundering and terrorism-financing controls, and took the unprecedented step of appointing a monitor to oversee the efforts. The move is a reminder of the scale of the challenges Deutsche Bank faces in improving compliance and oversight of its businesses after spending some $17 billion on fines for misconduct and to resolve other legal claims over the past decade.

Deutsche Bank acknowledged in August that its anti-money laundering processes remained inefficient more than a year after it was fined almost $700 million for helping wealthy Russians move about $10 billion out of the country. The lender was fined by U.K. and U.S. authorities for compliance failures, including methods that the New York Department of Financial Services said could have been deployed to facilitate money laundering. Deutsche Bank joins a small crowd of European lender to be singled out recently for lax money laundering controls. Denmark’s Danske Bank A/S last week admitted that about $234 billion of funds flowed through a tiny unit in Estonia, a lot of which was deemed suspicious. ING Groep NV ousted its chief financial officer earlier this month after receiving a $900 million fine related to money laundering, while Credit Suisse Group AG also was censured by Switzerland, (via Bloomberg).


FIFA bans three officials implicated in corruption scandal

Three FIFA officials have been banned from football for life for their roles in the widespread corruption scandal at the governing body. FIFA confirmed the sanctions for bribery and corruption against Costas Takkas, the former Caribbean Association Football (CONCACAF) attache and assistant to disgraced President Jeffrey Webb, Miguel Trujillo and Aaron Davidson. Trujillo is a former FIFA match agent, while Davidson is a chairman of the North American Soccer League and former president of Traffic Sports USA, a sports marketing company. The three officials have been fined £786,000. Takkas, one of the officials arrested in May 2015 before FIFA’s Congress in Zurich, pleaded guilty to one count of money laundering conspiracy on May 24 2017.

Davidson pleaded guilty to one count of racketeering conspiracy and one count of wire fraud on October 20, 2016, after he was involved in schemes in which he “offered bribes in exchange for securing contracts for the media and marketing rights of football tournaments.” Trujillo pleaded guilty on March 8, 2016, to one count of money laundering conspiracy and two counts of wire fraud conspiracy in connection with his participation in several schemes to bribe football official, (via Sky Sports).

Terror finance

September 2018 Terror Threat Snapshot: with nearly 160 domestic jihadist cases since 2013, homegrown extremism rising

The latest Terror Threat Snapshot from U.S. Rep. Michael McCaul (R-Texas) describes the growing number of homegrown terror arrests in the United States in recent years, as well as some impressive gains in the war against global terrorism. McCaul, Chairman of the House Homeland Security Committee, releases the monthly report which covers “the persistent terror threat to America” from jihadist extremist groups along with the latest developments in worldwide terror-related cases. Some key highlights:

On the domestic front:

  • TEXAS: Asher Abid Khan, 23, of Spring, Texas was sentenced Aug. 1 to 18 months in prison for providing material support to ISIS.
  • CALIFORNIA: Everitt Aaron Jameson, 27, of Modesto, California, was sentenced Aug. 6 to 15 years in prison for attempting to provide material support to ISIS.
  • ILLINOIS: Faress Muhammad Shraiteh, 21, a resident of Chicago but currently living in Israel, was indicted Aug. 10 for attempting travel to join ISIS.
  • INDIANA: Marlonn Hicks, 31, was sentenced Aug 20 to 15 years in prison for dispensing information on how to manufacture and utilize explosives to carry out violent attacks.
  • NORTH CAROLINA: On Aug. 22, Basit Javed Sheikh, 29, a Pakistani citizen pleaded guilty to attempting to provide material support to al-Nusra Front.
  • FLORIDA: Samuel Baptiste, 25, of Miami, was indicted Aug. 23 by a Grand Jury on “four counts of distributing information regarding explosives, one count attempting to provide material support to a foreign terrorist organization, and one count attempting to provide material support to terrorists.”

And internationally:

  • Aug. 31: Two Americans were stabbed at a train station in Amsterdam. A 19-year-old Afghan asylum seeker was arrested by Dutch law enforcement who later stated that the attacker had a “terrorist motive.”
  • Aug. 22: The leader of the Islamic State, Abu Bakral-Baghdadi, released a message calling for more attacks in the West. Contents of the audio speech indicated it was recently recorded because it mentioned the disagreement between Turkey and the United States over the jailed U.S. citizen Andrew Brunson, (via In Homeland Security).

Voter fraud

Hoboken woman paid voters $50 in vote-by-mail bribery scheme, U.S. Attorney says

A Hudson County woman is accused of paying Hoboken residents to cast mail-in ballots for particular candidates in what federal authorities describe as a voter bribery scheme, (via New


A podcast with crypto expert Joe Ciccolo on fincrime compliance regulations, regtech and more

Joe Ciccolo from BitAML on how regulators are dealing with cryptos, and how RegTech fits in, a podcast, (via CEO Money).

Health care fraud

The House Ways and Means Committee is exploring how the government can craft a comprehensive strategy to combating Medicare and Medicaid fraud

Getting a handle on the rampant healthcare fraud related to Medicare, Medicaid is a Herculean challenge that can only be accomplished with better data analysis, more cooperation and communication with federal investigative and oversight agencies and engaging in more rigorous training for analysts investigating fraud so they can better understand when charges are clearly fraudulent, (via the Thomson Reuters Legal Executive Institute), and ACFCS Board Member and attorney, Bruce Zagaris.