Readers will recall the story about the money laundering story at Lego Bank (here is the link) involving one of Denmark’s largest banks that discovered that the EU offers great opportunities from dishonest and crafty bankers to earn a lot of money from illegal activities.
The story caught the eye of the bank’s board and they appear to be greatly embarrassed that somebody in the media has disclosed the whole sordid story. Naturally notifications from whistleblowers and from other banks could be safely ignored for years.
A major financial newspaper has written today about an internal report from the bank:
“The bank said “a series of major deficiencies” in its control and governance system allowed its Estonian branch to be used for suspicious transactions from 2007 until 2015” …. about €200bn of payments had flowed through its Estonian branch from non-resident customers — from countries such as Russia, the UK and the British Virgin Islands — but that it could not yet estimate how many of these were suspicious. An analysis of 6,200 of the riskiest customers — out of 15,000 non-resident clients in total — showed that the “vast majority have been found to be suspicious”.
Even banking supervisors turned a blind eye because it does not improve the reputation of any country if your favourite banker has been doing criminal activities – especially on the scale that we saw with Lego Bank. It appears that the supervisors were passing the buck to supervisors in other countries.
… and if you think that all this was going on with other banks knowing full-well what was going on. One of the biggest German banks and one of the largest American banks warned Lego Bank’s management about this money laundering and yet nobody really did anything for years. And these 2 banks did not think it necessary to inform the supervisory folk either.
Well, at least the article in FinnishNews has finally brought about the resignation of the CEO and now even the US authorities are thinking of bringing charges against Lego Bank. The Americans must be happy to rake in some cash from the Danes while us poor Finns, who also have a big branch network of Lego Bank here in Finland, get nothing from their misdemeanours.
One of the biggest dilemmas here in the Nordic countries is that supervisory authorities have all been complaining that they do not have enough resources to supervise money laundering and white collar crime in banks. Even with small resources they should not have missed this huge money laundering factory – heads should also roll here too.
PS – Lego Bank is fictional and has nothing to do with the Lego toy company, but it does not take too much imagination to know what major Danish bank has been involved in good old-fashioned money laundering…