This week I would like to focus on money laundering, which forms part of the corruption menu. Unfortunately, Denmark, the second-least corrupt country in the world on the Corruption Perceptions Index of Transparency International, finds itself entangled in Europe’s biggest-ever money-laundering scandal. But, money laundering is not limited to Denmark, as you can see below:
Danske Bank CEO resigns in $234-billion money-laundering scandal: Thomas Borgen, Danske Bank’s chief executive officer, announced on Wednesday that he is to step down as the company’s chief executive after it was found that the bank’s Estonian branch was used for large-scale money laundering. The bank says over $234 billion flowed through the Estonian branch originating from nonresidents between 2007 and 2015. However, the bank says it is impossible to give an accurate estimate of how much of that money consisted of suspicious transactions. An external investigation conducted by a Danish law firm found that AML procedures at the Estonian branch had been inadequate and deficiencies included a lack in screening of customers and knowledge about the beneficial owners of accounts, and possible collusion in the branch. Dankse Bank remains under investigation in Denmark and the US, among other jurisdictions, over the scandal.
Unfortunately, this is not that uncommon. We have seen several cases where financial institutions in countries with clean reputations were used for laundering money.
The Swiss financial watchdog, Finma, says Credit Suisse repeatedly failed to combat money laundering: Finma, delivered a report very recently, saying that banking giant Credit Suisse repeatedly failed to adequately combat money laundering in cases linked to soccer body Fifa and Venezuelan and Brazilian state oil companies. Despite the findings, the bank will not be fined, as Finma does not have the authority to impose fines or force the bank to return profits it may have reaped illegally. Finma will appoint an independent auditor to oversee the bank’s anti-money-laundering processes.
HSBC agreed in 2012 to pay $1.92 billion to settle money-laundering allegations with US regulators. Authorities said HSBC allowed the most notorious international drug cartels to launder billions of dollars across borders. The case sparked a wave of anti-money-laundering campaigns and reforms across the world, including in the European Union.
But more cases keep popping up. ING agreed earlier this month to pay €775 million ($900 million) to Dutch regulators after admitting poor controls allowed criminals to launder money through its accounts.
Glencore, the world’s biggest mining headquartered in Switzerland, faces a potential investigation by US authorities for alleged money laundering, after being ordered to hand over documents to the Department of Justice. The subpoena relates to compliance with the Foreign Corrupt Practices Act and US money-laundering laws, Glencore said.
“There are very limited sanctions enforced in some countries and the supervisory bodies at the national level don’t always do their job,” said Laure Brillaud, an expert on money laundering with Transparency International.
It is obvious that developed countries need to step up their enforcement of anti-money-laundering rules, and make it harder for corrupt regimes to secretly funnel their cash into the economy. They also need to make sure parliaments have integrity measures in place to protect against corruptive influence from known offenders.
Comments are welcome; e-mail me at Schumacher@eitsc.com.
