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Danske Bank's $225 billion money-laundering scandal might be 'tip of the iceberg' of Russian wealth flowing into West

Danske Bank's $225 billion money-laundering scandal might be 'tip of the iceberg' of Russian wealth flowing into West
  • Danske Bank's 200 billion euro ($225 billion) money-laundering scheme might be the "tip of the iceberg," a lawyer for the scandal's whistleblower said.
  • Danske's Estonian branch helped launder billions of euros of non-resident money through the tiny branch between 2007 and 2015.
  • Stephen Kohn, who is representing Danske whistleblower Howard Wilkinson, has said that investigators should examine whether major Western banks played a role in the scandal.

LONDON (Reuters) — Danske Bank's 200 billion euro ($225 billion) money-laundering scandal might be the "tip of the iceberg" and investigators should examine whether major Western banks played a role, a lawyer for the whistleblower said.

Stephen Kohn, a partner at US law firm Kohn, Kohn, and Colapinto who is representing Danske whistleblower Howard Wilkinson, told Reuters that Danske may be only a bit player in a scheme to move wealth from countries like Russia to the West.

"It looks like the tip of the iceberg," he told Reuters on the sidelines of a two-day London OffshoreAlert conference on financial intelligence and investigations. "The problem is far bigger than has been reported."

"If this is properly investigated, and the money followed all the way to the end — it all went to large, multinational Western financial institutions and either the US government or other authorities have the ability to track down every transfer and any account," he said, without providing evidence for the allegation.

Wilkinson, a British former head of markets in Danske's Estonian branch until 2014, was outed by newspapers in September as the whistleblower who helped lift the lid on how billions of euros of non-resident money, much of it from Russia, had flowed through the tiny branch between 2007 and 2015.

After an internal investigation, published by Danske the same month, the bank said many transactions were probably suspicious. The scandal has sparked criminal investigations of Danske in Denmark, Estonia, and the United States, forced out its chief executive and chairman and sent the bank's shares plunging.

Britain's National Crime Agency said in September it was investigating the use of UK-registered companies in connection with the Danske Bank case.

Risk of retaliation

Whistleblowers who have been publicly named are at a greater risk of retaliation. Kohn said Wilkinson "has interacted with law enforcement" and is satisfied with their response. He declined to comment further.

The Briton is due to testify before the Danish and European Parliaments next week. But his testimony is likely to be limited because he remains potentially liable for anything he says.

"The threat of a lawsuit has a chilling effect," Kohn says.

Kohn believes whistleblowers need to be financial rewarded. He won a record $104 million individual reward in 2012 for whistleblower Bradley Birkenfeld, the man who exposed tax evasion facilitated by UBS — although Birkenfeld also served almost three years in jail.

The European approach, that effectively turns "informants into martyrs," is "a joke," he says.

British lawmakers continue to call for better protection for whistleblowers, who risk ending up blacklisted, bankrupt and damaged after lifting the lid on wrongdoing. But regulators have to date resisted calls for financial incentives, insisting this will not significantly increase integrity and transparency.

Kohn vehemently disagrees. He says whistleblowers might sometimes participate in wrongdoing, but that they are essential to uncovering the truth because white-collar crimes are hidden - and crime is more profitable than honesty.

Since February 1986, when US whistleblowing laws were modernized, the US government has paid whistleblowers $6.5 billion — and billions more have been recovered, he said.

"Europe is asleep. I am angry at what I see in Europe," he told the conference.

Kohn describes Wilkinson, who he says told Danske everything he knew before resigning, as credible, with an unblemished employment history, who risked his career and livelihood to stop one of the biggest money laundering scandals in history.

"He's the real McCoy (the genuine article). He gives whistleblowing a good name," he said.

Source: http://uk.businessinsider.com

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