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Money Laundering Affair Hurts Global Brand

The German bank admitted it had processed some of these transactions which took place between 2007 and 2015. According to a confidential internal report quoted by The Guardian in April this year, Deutsche Bank acknowledges the scandal has hurt its global brand. The document warns about possible fines, disciplinary and legal action because of the bank’s role in a $20 billion Russian money laundering scheme.

Failure to comply with anti-money laundering (AML) regulations has reportedly lead to a federal investigation into Deutsche Bank in the U.S. The New York Times wrote last month that the FBI wants to know how the bank handles reports of suspicious financial activities. According to the publication, the U.S. Department of Justice has also opened a criminal investigation into potential money laundering. Some of the transactions in question were linked to Donald Trump’s son-in-law and White House adviser Jared Kushner.
Raiffeisen Neglected Money Flows From Danske

Other European financial institutions were also caught up in the scandal with Denmark’s largest bank. Raiffeisen Bank International and other Austrian banks were accused of negligence regarding suspicious flows from Danske Bank. Finland-based Nordea and the Swedish Swedbank are also among those implicated in the money laundering scandal. The shares of all these banks lost value following the revelations.

Criminal investigations into Danske Bank’s conduct have been opened in Denmark, Estonia, Britain and the United States. Earlier this year, the bank announced it’s pulling out of the Russian Federation and the Baltic countries. In May, the Danish press reported that Thomas Borgen, a former chief executive responsible for Danske’s international operations between 2009 and 2012, has been charged for his role in the money laundering case.

In the aftermath of the affair, all Nordic banks took steps to improve their compliance with AML regulations. For example, Danske Bank increased its compliance staff from 1,200 to 1,700 employees. Furthermore, the region’s six leading banks – Danske, Swedbank, Handelsbanken, Nordea, SEB, and DNB – created a customer checking center as part of their efforts to recover from the scandal and combat money laundering more effectively.
Belgium’s KBC Accused of Laundering Swiss Funds

Another money laundering scandal erupted in the administrative center of the European Union. In late June, Belgian media reported that KBC Bank, part of the Brussels-based KBC Group which has 11 million clients and thousands of branches across Europe, has been accused of facilitating money laundering and tax evasion by Belgian citizens who have transferred large amounts of foreign assets into the country since 2005. The charges were brought against the banking group by the prosecutor’s office for East Flanders in Ghent.

The clients involved in the case include four members of a family that owns and manages a door and window construction company called Engels in the Flemish city of Lokeren, The Brussels Times revealed. According to the report, over a period of 13 years the Engels family repatriated millions of euros from bank accounts in Switzerland. Prosecutors claim that a mother and her three sons did not pay due taxes and fines and the transactions should have been flagged as suspicious and reported to the Belgian financial authorities.

KBC Bank insists it acted according to the information it had at the time and there was no reason to suspect money laundering activities. Both the legal team of the financial institution and the accused members of the Engels family have indicated their intentions to fight the charges in Belgian courts. KBC Group, which operates in Belgium, Ireland, the Czech Republic, Slovakia, Hungary, and Bulgaria, said in a statement that in recent years it has continuously upgraded its systems for identifying and preventing tax evasion.
Tanzanian Bank Offices in Cyprus Raided by Police

Elsewhere in Europe, Cypriot police raided the offices of FBME Bank in Nicosia and in Limassol this past May, as part of another money laundering investigation. According to sources quoted by the Organized Crime and Corruption Reporting Project (OCCRP), the law enforcement officers gathered evidence from the bank’s servers and documents and questioned the employees who were at the branches at the time of the operation.

The non-profit media organization further detailed that the investigation in Cyprus concerns various cases of legalization of proceeds from criminal activities such as drug smuggling and terrorism financing. No arrests have been made so far and the bank’s owners are yet to be questioned. In 2014, FBME, which is headquartered in Tanzania, was described by the U.S. Treasury’s Financial Crime Enforcement Network (Fincen) as a “financial institution of primary money laundering concern.” Fincen banned U.S. banks from dealing with it.