European banking giant Nordea has\u00a0agreed\u00a0to pay $35 million to New York\u2019s financial services watchdog following an investigation into the Helsinki-based bank\u2019s alleged failure to prevent money laundering and other criminal activities, including some exposed in the Panama Papers leak.<\/p>\n\n\n\n
The New York State Department of Financial Services said it had identified \u201csignificant compliance failures\u201d between 2008 and 2019 by the bank, which failed to conduct proper due diligence of its clients and banking partners as required by the Bank Secrecy Act.<\/p>\n\n\n\n
\u201cInternational financial entities such as Nordea must safeguard against criminal activity in the global financial system, and for years Nordea failed in these respects,\u201d said Superintendent Adrienne Harris, who leads DFS,\u00a0in a statement.<\/p>\n\n\n\n
According to the regulator, Nordea\u2019s weak compliance program exposed the bank\u2019s financial channels, and therefore the New York financial system, to \u201ca high risk of criminal abuse.\u201d<\/p>\n\n\n\n
The consent order cited ICIJ\u2019s 2016\u00a0Panama Papers\u00a0investigation, which exposed a shadowy global industry of law firms and big banks selling financial secrecy to clients \u2014 including politicians, celebrities and fraudsters \u2014 around the world.<\/p>\n\n\n\n
The investigation was based on 11.5 million leaked documents, which named 72 customers of Nordea\u2019s international branch in Vesterport, Denmark. DFS said the revelations exposed Nordea as one of many financial institutions that failed to \u201cfollow legal requirements that would ensure their customers were not involved in criminal endeavors, tax evasion, or political misconduct.\u201d<\/p>\n\n\n\n
It said that Nordea was\u00a0linked\u00a0to billions of dollars of suspicious transactions over roughly a decade, and that the Vesterport branch was also implicated in two other high-profile money laundering schemes, known as the \u201cRussian Laundromat\u201d and \u201cAzerbaijani Laundromat.\u201d<\/p>\n\n\n\n
Last month, Danish authorities\u00a0indicted Nordea\u00a0for violating anti-money laundering laws by failing to stop $3.7 billion of suspicious transactions involving Russian clients, shortcomings previously exposed in a separate ICIJ investigation a decade ago.<\/p>\n\n\n\n
ICIJ media partner Politiken revealed in 2013 as part of\u00a0Secrecy for Sale\u00a0that Russian nationals and others used services of Nordea\u2019s Copenhagen branch to maintain about 100 offshore companies, sparking an eight-year investigation.<\/p>\n\n\n\n
Nordea\u2019s chief compliance officer, Jamie Graham, acknowledged in\u00a0a statement\u00a0that the bank had \u201chistorically \u2026 underestimated the complexity of preventing financial crime and the resources needed for that purpose.\u201d The statement noted that Nordea had invested some 1.5 billion euros, or roughly $1.7 billion, in anti-money laundering controls since 2015.<\/p>\n\n\n\n
\u201cThe bank has taken significant measures to improve financial crime processes and procedures since the period covered by DFS\u2019s investigation,\u201d Graham said.<\/p>\n\n\n\n
According to the consent order, Nordea\u2019s total assets were worth approximately $627 billion as of 2023, with its New York branch holding more than $37 billion in assets. The bank\u2019s statement said the New York fine would have \u201cno material impact on the financial position of Nordea.\u201d<\/p>\n\n\n\n
Columbia University law professor John Coffee, who specializes in white-collar crime, told ICIJ via email that the settlement agreement implied the state regulators were \u201cvery happy with Nordea\u2019s level of cooperation.\u201d<\/p>\n\n\n\n
Suzanne Lynch, an adjunct professor on financial crime at Utica University, also noted the heavy emphasis on cooperation. Lynch said she was surprised to see scarce mention of federal-level investigations in the 44-page consent order.<\/p>\n\n\n\n
\u201cSo the question remains, will the feds go after them too?\u201d she said. \u201cThey\u2019re the ones that ultimately really deal with the financial intelligence gathered.\u201d<\/p>\n\n\n\n