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This Week in Compliance: Danske Bank CEO resigns in USD 234 billion money laundering scandal

By GAN Integrity

Here’s what's been going on in the compliance world this week: 


  • Danske Bank CEO resigns in USD 234 billion money laundering scandal: Thomas Borgen, Danske Bank’s CEO, 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 USD 234 billion flowed through the Estonian branch originating from non-residents 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 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 U.S, among other jurisdictions, over the scandal.
  • Swiss financial watchdog says Credit Suisse repeatedly failed to combat money laundering: Switzerland’s financial watchdog, FINMA, delivered a report on Monday 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. Credit Suisse responded to the findings by saying these are “legacy weaknesses” that they have worked to overcome since Chief Executive Tidjane Thiam was appointed in March 2015.
  • Garuda Indonesia sues Rolls-Royce in relation to bribery scandal: Garuda Indonesia, the country’s national airline, is suing Rolls-Royce and its subsidiary Rolls-Royce Total Care Service over a fraudulent contract signed in 2008 under former director Emirsyah Satar. Garuda is suing for damages amounting to USD 43 million, which it says it suffered from the contract signed in 2008, which was renewed in 2015 and expired in September 2017. Satar was named as a suspect in the Rolls-Royce bribery scandal by Indonesia’s anti-graft agency in 2017 over allegations that he received in excess of USD 3 million in kickbacks through a middleman in the purchase of engines for Airbus aircraft.
  • Whistleblower who delayed reporting misconduct receives reduced award: The U.S. Securities and Exchange Commission awarded a whistleblower, who delayed reporting on the misconduct for a year, a reduced award of USD 1.5 million. The agency said that the whistleblower provided information and assistance “vital to the overall success of the enforcement action” but also indicated that the whistleblower benefitted financially during the delay. Moreover, the whistleblower was deemed to be “culpable” and only reported to the SEC after learning of the agency’s investigation. It is unclear how much higher the award could have been if the disclosure was made in a timelier fashion.
  • Spain’s High Court refuses Swiss extradition request for HSBC whistleblower: A request for the extradition of Hervé Falciani, the whistleblower who leaked the details of thousands of HSBC’s clients, was denied by Spain’s high court this week. The court reasoned that the charges included in the Swiss ruling are not considered crimes in Spain. A Swiss court sentenced Falciani in absentia to five years of imprisonment in 2015 for leaking financial secrets. The data Falciani leaked launched investigations in France, Austria, Belgium, Spain, and Argentina into the tax affairs of wealthy individuals.


  • Argentina’s former President indicted on corruption charges: Former President Cristina Fernandez was indicted on Monday by a federal judge in Argentina on charges that her administration accepted bribes from construction companies in exchange for public works contracts. The case came to light in August when a local newspaper published allegations by a chauffeur of Fernandez’s former planning minister; his notes allege bags of cash being delivered to government offices and Fernandez’s private residence. The scandal has so far implicated dozens of former officials and businessmen in the construction sector. Despite the allegations, Fernandez still enjoys widespread popular support and is expected to run for president again next year.
  • Malaysia’s former Prime Minister charged in 1MDB case: Najib Razak, Malaysia’s former Prime Minister, was charged with 21 counts of money laundering and four counts of abuse of power by prosecutors in Malaysia on Thursday relating to hundreds of millions of dollars he received in his personal bank account. The probe relates to Malaysia’s investment fund 1MDB, a state fund founded and chaired by Najib. Prosecutors say Najib used his position to siphon of funds totaling USD 556 million between 2011 and 2014. The newly-announced charges add to the seven charges relating to the case earlier this year.


  • Novartis attempts to rebuild reputation with ethics scoring system: Novartis, the Swiss pharmaceutical giant, revealed this week that its employees will only be eligible to receive a bonus if they meet or exceed expectations for ethical behavior. On a scale from 1 to 3, employees need to score at least a 2 to be eligible. The drug maker has come under regulatory scrutiny in recent times; it paid USD 25 million two years ago to settle civil charges in the U.S. over bribery allegations in China. In addition, the company became embroiled in controversy earlier this year that Novartis had paid Michael Cohen, President Trump’s personal lawyer, in a bid to gain access to the president.

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