Exactly one week after a Danish law firm published a 70+ page report claiming that roughly 200 billion euros ($235 billion) - nearly all of the money flowing through Danske Bank's Estonia branch - qualified as suspect, a Danish newspaper has finally revealed the name of the whistleblower who set in motion one of the largest money laundering scandals in European history.
And no, it isn't Bill Browder. Instead, the whistleblower is a former Danske Markets trader named Howard Wilkinson, a British executive who was formerly the bank's Baltics trading head. Wilkinson eventually told a Danish newspaper about the fraud, and it went on to blow the lid off the scandal.
Berlingske, the newspaper that first reported allegations that Danske Bank A/S was being used to launder billions of dollars in dirty money, revealed the identity of the whistle-blower who provided much of the information in the case.
His name is Howard Wilkinson, the newspaper said on Wednesday. From 2007 to 2014, he was in charge of trading at Danske Markets in the Baltics. Wilkinson agreed to come forward and confirm his identity, the newspaper said. He was employed at Danske until April 2014, which he says is four months after he provided his first whistle-blower report to the bank’s top management, according to Berlingske.
Wilkinson started cooperating with Danish authorities in early 2014, four months before he left Danske, per Bloomberg.
According to comments from Wilkinson published in the FT, Wilkinson first raised the issue of suspicious UK LLPs transacting through Danske's Estonian branch back in 2014. While the bank's audit division initially corroborated Wilkinson's findings, the bank didn't do anything to follow up until years later, after reporters tipped off by Wilkinson had come calling.
Howard Wilkinson, who was head of markets at Danske in Estonia between 2007 and 2014, warned managers in late 2013 that the bank had breached "numerous regulatory requirements . . . [and] behaved unethically . . . [and had] a near total process failure,” according to his emails seen by the Financial Times.
Mr Wilkinson told Berlingske, the Danish newspaper that broke news of his involvement and the broader scandal, that "I have absolutely no problem sleeping at night" in response to press reports in Estonia questioning his role in the affair.
An internal auditors report that relied heavily on the whistleblower's testimony explained in detail how senior executives ignoring red flags and complaints filed both internally and by regulators simply because they were making too much. At one point, virtually all of the Estonian branches considerable profits came from non-resident customers (a popular cover for money launderers).
Highlighting the international nature of a scandal that has battered Denmark's largest lender and has provoked speculation about lapses in pan-European AML controls, the Financial Times reported on Tuesday that UK-based corporate entities played a key role in the scandal. One British LLC that helped siphon money out of Russia via Danske's Estonian branch has even been linked to the family of Russian President Vladimir Putin and members of the FSB.
The unassuming north-west London suburb of Harrow is known more for its nearby exclusive school than an international dirty money conspiracy.
But just off Station Road, next to the railway tracks and behind a small police station, is the registered address of a UK company that is alleged to be a small part of the world’s biggest money-laundering scandal, which is roiling Danske Bank, Denmark’s largest lender.
Lantana Trade LLP was named in a report by a whistleblower into suspicious activity at Danske’s Estonian operation. It is just one of thousands of entities allegedly used to siphon money out of Russia.
The real owners of Lantana Trade are alleged to be the family of Vladimir Putin, the Russian president, according to the whistleblower’s report which was leaked earlier this year to Danish newspaper Berlingske.
Lantana is now dissolved, according to information from Companies House, the UK’s official registrar for more than 4m companies.
"President Putin has nothing to do with the mentioned bank," a Kremlin spokesman told the Financial Times.
Indeed, shell companies like this one based in the UK have been the preferred vehicle for international money launderers, not just those who laundered money via Danse.
Indeed, the whistleblower told Danske’s board that UK limited liability partnerships such as Lantana were “the preferred vehicle for non-resident clients”, according to the bank’s report. The report found that, after Russians, UK entities such as LLPs and Scottish limited partnerships (SLPs) were the second-biggest proportion by geography of those non-resident customers.
"UK LLPs and LPs have represented a vehicle of choice for money launderers around the world. It is no surprise that UK companies were the most commonly used to channel suspicious wealth through the bank," said Rachel Davies Teka, Transparency International UK’s head of advocacy.
But the UK isn't the only jurisdiction facing scrutiny in one of the largest money laundering scandals in history. As the Financial Times reported, EU regulators have followed the US DOJ and launched an investigation into why Danish and Estonian regulators didn't do more to put a stop to the fraud.
The European Commission has asked the European Banking Authority, an EU watchdog, to "make full use" of its powers to probe what went wrong in the oversight of the Danish lender’s Estonian branch, following revelations of internal lapses that prompted the bank’s chief executive officer to resign last week.
But despite the uproar over the scandal, criminals in ex-Soviet states who are worried about the possible closing of this crucial door to the west shouldn't worry just yet. While Danske CEO Thomas Borgen said he would resign, he is staying on temporarily - and continuing to collect his considerable salaray - until a replacement is found. Meanwhile, the bank's chairman has only hinted at a possible resignation.
As one critic pointed out, the only thing that will solve this problem is a joint European banking controls.
"The departure of Thomas Borgen from Danske Bank doesn’t solve the actual problem with the scandal. If we really want to prevent money laundering we need a joint European bank control," said Rasmus Nordqvist, spokesperson on EU and financial trades for Denmark's leftwing party, told the FT. "This scandal calls for a large-scale discussion of the financial sector’s power. As politicians we need to be courageous in regards to regulation."
Eurasian criminals, be advised. So far, the response to this scandal has been all bark and no bite. Should the US step up and force the issue, it's possible some reforms might be enacted. But as of now, European regulators just can't seem to get it together.