Nordea Faces $1 Billion Penalty in Landmark Danish AML Case

Nordea’s entanglement with Danish prosecutors could leave the Finnish bank with a $1 billion headache, it’s predicted. Prosecutors last week charged Nordea with violating anti-money laundering (AML) laws between 2012 and 2015 by processing more than $3 billion worth of suspicious transactions, largely linked to Russian clients.

The entities and people involved were spread across various geographies such as Russia, Malta, Monaco, Panama, and the Seychelles. Many of the companies listed have been dissolved. Nordea also sold more than €100,000 in €500 bills without running adequate checks, despite knowing large banknotes are a favorite of criminals, police allege.

Hans Fogtdal, a lawyer and former deputy public prosecutor at Denmark’s National Special Crime Unit (NSK) – which is bringing the case against Nordea – says the case has no precedent. However, he told Bloomberg the case could attract a penalty of as much as 6.5 billion Danish kroner ($943 million). This is far in excess of the €95 million which the bank has provisioned for the case.

“We expect to be fined but we do not agree with the assessment of the authorities,” Nordea spokesman Tuomas Forsell said. “This is a case going back in some instances more than 10 years, and which is, among other things, now being assessed based on subsequent regulations.”

The NSK declined to comment on the potential fine but confirmed it disagrees with the bank over its quantum. The indictment marks the first time a money-laundering case against a bank goes to court in Denmark. Previous cases have been settled.

The bank set aside the provision assuming the prosecution would be brought under legislation in place when the alleged offenses happened. However, the NSK is expected to bring the case under legislation providing for much larger penalties and enacted later. The bank is charged with deficient controls, ignoring alarms, and failing to report suspicious money flows to authorities.

NSK claims Nordea didn’t run proper checks on money flows totalling 26 billion kroner carried out by 25 clients, even though they raised classic red flags such as letterbox business addresses and opaque ownership structures.

By fLEXI tEAM