House Democrats May Investigate Alleged Trump Ties to Russian Money Laundering

By Dan Friedman

Rep. Adam Schiff (D-Calif.), the incoming chairman of the House Intelligence Committee, has signaled plans to use his newly won subpoena power to aggressively investigate whether Russian interests laundered money through Donald Trump’s businesses and used the connection as leverage over the president, a line of inquiry sure to enrage Trump.

Schiff and other committee Democrats have recently said they do not intend to launch an entirely new Russia probe but will instead pursue investigative angles that other inquiries have not delved into. Schiff has repeatedly asserted that the question of whether Trump’s businesses relied on laundered Russian funds tops that list.

“No one has investigated the issue of whether the Russians were laundering money through the Trump Organization and this is the leverage that the Russians have over the president of the United States,” Schiff said at a Brookings Institution panel discussion last month, before Democrats regained control of the House in the midterm elections. He reiterated that sentiment in an NPR interview on Wednesday.

In a report issued in March after Republicans abruptly ended the Intelligence Committee’s Trump-Russia probe, committee Democrats said they want to gather more information on Trump’s past financing by Deutsche Bank, which in 2017 was hit with $630 million in fines from US and UK regulators over its involvement in a $10 billion Russian money-laundering scheme. “We have only begun to explore the relationship between President Trump and Deutsche Bank, and between the bank and Russia,” the lawmakers wrote. They said they hope to ask: “Did the Russian government, through business figures close to the Kremlin, seek to court Donald Trump and launder funds through the Trump Organization; and did candidate Trump’s financial exposure via Deutsche Bank or other private loans constitute a point of leverage that Russia may have exploited and may still be using?”

Trump and his defenders have asserted that investigating the president’s businesses prior to his presidential run should be out of bounds for investigators. In a news conference Wednesday after Democrats captured control of the House, Trump said he would assume “a warlike posture” if Democrats investigate his finances and political dealings. He threatened to use the GOP controlled Senate to launch competing investigations of Democrats, though Senate Republicans have not indicated they’d cooperate. “If the Democrats think they are going to waste Taxpayer Money investigating us at the House level, then we will likewise be forced to consider investigating them for all of the leaks of Classified Information, and much else, at the Senate level, ” Trump tweeted Wednesday.

Schiff has also said that he plans to pursue perjury charges against witnesses suspected of lying in interview with the panel. The committee can do this by sending referral letters to Special Counsel Robert Mueller or by voting to turn over to Mueller still-unreleased interview transcripts of witnesses believed to have provided false testimony. Prosecutors could then use any information they have gathered that contradicts the witnesses’ claims to pursue perjury charges.

Democrats have said they suspect that Erik Prince, the founder of the controversial private military contracting firm Blackwater and brother of Education Secretary Betsy DeVos, former Trump campaign adviser Carter Page, and longtime Trump adviser Roger Stone, were not truthful in testimony to the Intelligence Committee. Schiff on Wednesday singled out Stone, whose possible contacts with WikiLeaks have come under intense scrutiny from Mueller. Schiff told NPR that recently released emails, “if authentic,” show that “some of [Stone’s] answers before our committee are highly suspect.”

The New York Times reported this month that Stone had emailed in October 2016 with Steve Bannon, then the head of Trump’s presidential campaign, regarding what Stone suggested was his inside knowledge of WikiLeaks’ plans for releasing hacked Democratic emails. Stone has told reporters that he never communicated with the Trump campaign about WikiLeaks. Schiff’s statement suggests Stone may have made a similar claim under oath, though it is not clear what the congressman meant. A Schiff spokesman declined to comment. Stone did not respond to inquiry.

Intelligence Committee Democrats have previously flagged a number of areas where they say their Republican colleagues failed to pursue obvious leads. For example, the GOP-led panel failed to follow up after the White House stonewalled a request for records related to President Trump’s May 12, 2017 suggestion that he may possess “tapes” of his conversations with former FBI Director James Comey. The White House merely pointed to tweets in which Trump walked back his claim about tapes. But Democrats said in March that they have “reason to believe that the White House does in fact possess” records related to the meeting.

In public remarks, Schiff has repeatedly mentioned that he wants to look into a phone call that Donald Trump Jr. received from a blocked number while Trump Jr. was arranging the June 2016 Trump Tower meeting where he hoped to receive damaging information on Hillary Clinton he believed Russia was offering. Democrats are likely to subpoena records aimed at determining if the blocked number belonged to his father, a step committee Republicans declined to take. “That’s obviously pivotal in terms of the president’s involvement in any potential collusion or conspiracy to seek Russian help, illegal Russian help, during the campaign,” Schiff recently said.

Democrats have named more than 40 witnesses who the GOP-led committee declined to question, but who the committee may seek to interview under Democratic control. They include Kellyanne Conway, who appears to have been in touch during the campaign with a Republican political operative, Peter Smith, who attempted to get in contact with Russian hackers he believed were in possession of emails that Hillary Clinton deleted from the private server she used while Secretary of State. Smith committed suicide last year before news of his activity broke. The list of possible witnesses also includes White House aide Stephen Miller, former White House spokesman Sean Spicer, former White House Chief of Staff Reince Priebus, and many more.

Democrats could also subpoena Dimitri Simes, a former Nixon aide and CEO of the Center for the National Interest, which hosted an April 27, 2016 foreign policy speech by Trump at Washington’s Mayflower Hotel. Democrats in their March memo said that the committee “has reason to believe that Mr. Simes played a central role in drafting portions of the speech related to Russia.” Simes maintained close contact with Maria Butina, the Russian gun rights enthusiast indicted and jailed for acting as an unregistered foreign agent. Democrats have said they want Simes’ correspondence with the Trump campaign and with people close to the Russian government.

The Intelligence Committee will work to protect the Mueller’s investigation, Schiff says. Trump on Wednesday ousted Attorney General Jeff Sessions and announced the installation of Sessions’ chief of staff, Matt Whitaker, as acting attorney general, with responsibility for overseeing the Special Counsel. In past radio and TV appearances before joining the Justice Department, Whitaker has attacked Mueller’s probe and stated that there was no evidence to support the fact that Russia had intervened in the 2016 election.

“Interference with the Special Counsel’s investigation would cause a constitutional crisis and undermine the rule of law,” Schiff said in a statement last week. “If the President seeks to interfere in the impartial administration of justice, the Congress must stop him. No one is above the law.”

https://www.motherjones.com/politics/2018/11/house-democrats-may-investigate-alleged-trump-ties-to-russian-money-laundering/

Baton Rouge man indicted for international money laundering in connection with drug business

By Rachel Thomas

BATON ROUGE, LA (WAFB) – A Baton Rouge man has been indicted by a federal grand jury for allegedly aiding and abetting a conspiracy to distribute drugs, international money laundering, and other charges related to these activities.

Donovan Barker, 59, made his initial court appearance on October 25 and pleaded not guilty.

According to the indictment, Barker owned and operated several businesses (Quantum Information Technologies, Caring Partners 1, llc, Don Western Sky, llc, Life Positive Services, llc, and Healthy Life 1, llc.), which sold and distributed green tea extracts and herbal supplements, but was actually working with others to import schedule IV drugs into the U.S. in order to repackage and distribute those drugs to people who had purchased them online. Barker was also reportedly accepting payments from these buyers and transmitting money to others operating outside the country.

The Department of Justice says from October of 2012 to February of 2016, Barker received more than $4.6 million in payments from people all over the country who had bought drugs and other substances online. Barker reportedly wired a majority of the money to various foreign bank accounts in the Philippines, India, China, and Canada. Barker is alleged to have been operating a money transmitting business without the proper license and without complying with applicable federal registration requirements.

The indictment also alleges that on May 24, 2016, Barker knowingly and intentionally possessed tramadol, a controlled dangerous substance.

“This indictment demonstrates the lengths to which international drug traffickers will go to deliver drugs and the efforts my office will make to stop them. We are committed to eliminating the international financial network used by drug dealers to bring drugs to our country and launder their illegal proceeds. I want to thank our prosecutors and our federal, state, and local partners for their extraordinary efforts in this case,” said U.S. Attorney Brandon Fremin.

Barker is indicted on charges of aiding and abetting a conspiracy to distribute tramadol and carisoprodol, international money laundering, unlawful money transmitting, and possession of tramadol.

Accenture Ventures links up with AI firm Quantexa to tackle money laundering, credit risk

John Davis and Sean McMahon

Accenture Ventures has taken a minority stake in data analytics firm Quantexa. The investment will spur Quantexa’s artificial intelligence-based network analytics and entity resolution technology. The solution will integrate with Accenture Applied Intelligence to aid Accenture clients in finding new, actionable insights. The collaboration will also enable the detection of financial crime.

Accenture plans to combine its own technology with Quantexa’s network analytics technology to develop AI-enabled solutions to detect money laundering, credit risk and provide customer insights. Accenture will use its Financial Crime Analytics Utility to refine Quantexa’s network analytics modeling.

“Accenture is committed to employing innovative techniques to help our clients tackle complex issues such as money laundering,” said Adam Markson, managing director, Accenture Finance & Risk Services. “By investing in Quantexa and combining our expertise, we are equipping our clients with new technologies and approaches to solving the most pressing data issues. Furthermore, the strategic alliance further enhances our Financial Crime Analytics Utility, which will help prevent the movement of illicit funds that enable real world issues, including human trafficking and drug crime.”

London-based, Quantexa applies leading-edge analytics and big data to identify difficult-to-detect customer connections and behavior. Quantexa’s technology has successfully detected potential money-laundering activity via the analysis via network analysis.

“We are delighted to be working with Accenture to deliver and scale our technology to help solve our clients’ biggest data challenges,” said Quantexa CEO Vishal Marria. “Creating context is critical in investigations to help clients connect the dots in their data, allowing them to see the complete picture and make better decisions.”

International anti-money laundering reforms and Iran

By Aaron Arnold

At its October meeting, the Financial Action Task Force—an intergovernmental body that promotes international anti-money laundering and counter-terrorism financing standards—decided that it will not call on its members to apply countermeasures against Iran. (In the world of such intergovernmental bodies, the word “countermeasures” has a very specific meaning: taking action to block Iran. Meanwhile, “measures” merely refers to enhanced scrutiny.) But the organization did say that countries should tightly watch over Iranian transactions even if not going so far as to terminate certain types of banking networks with Iran.

Why is this distinction important? Because in essence, the organization’s decision gives Iran an additional four months to enact anti-money laundering reforms that are in line with international standards—and gives the European Union that much more political wiggle room in its effort to try to salvage the nuclear deal with Iran.

The tortured history of anti-money laundering reforms in Iran. Such reforms are crucial if Iran is to get relief from sanctions. Although enacting new, anti-money laundering legislation is not a condition of the Joint Comprehensive Plan of Action—the agreement between Iran and the P5+1 (the United States, United Kingdom, France, Russia, China, and Germany) that curbed Iran’s nuclear program in exchange for sanctions relief—doing so is necessary for Iran to reintegrate into the global financial system. Foreign investment in Iran, for example, would be stymied if banks perceived the country’s financial system to be high-risk. This is why the Financial Action Task Force’s original decision, back in June 2016, to suspend countermeasures against Iran was so consequential: The decision provided the political space necessary for Iran to begin implementing new anti-money laundering rules and regulations. At least, that was the plan.

That plan changed in May this year, when the Trump administration decided to unilaterally withdraw from the Iran deal and reimpose US financial and economic sanctions. The US Treasury Department gave companies two separate 90-day and 180-day deadlines to end ties with Iran, otherwise known as “wind-down periods.” This week marks the end of the final wind-down period, whereby the United States reimposes sanctions on Iran’s financial, energy, shipping, and insurance sectors. Remarks by US Treasury Secretary Mnuchin suggest that the United States is even prepared to sanction SWIFT—the Belgium-based financial messaging service that handles the bulk of global transactions—if the company does not disconnect Iranian banks from its services. A move like that would not only intensify the dour state of relations with the European Union, but potentially invite significant blow-back against US banks.

In June 2016, Iran committed to implementing an action plan addressing its money-laundering and counter-terrorist financing deficiencies. Although Iran has since moved several reform efforts forward, they still fall short of international standards. Specifically, the Financial Action Task Force noted that Iran had failed to adequately address nine out of ten commitments from the country’s action plan. For example, Iran’s counter-terrorist financing legislation includes exemptions for groups “attempting to end foreign occupation, colonialism, and racism”—a rather glaring loophole. Iran also still lacks appropriate mechanisms and authorities to identify and freeze terrorist-linked assets in line with relevant UN resolutions. And it lacks rules and regulations to ensure adequate customer due diligence requirements. These are just a few of the many places where Iran has failed to measure up to international standards in this area—in some cases, for as long as a decade.

Since 2008 the country has made overtures to join the Financial Action Task Force, and promised to adopt a range of anti-money laundering and counter-terrorist financing reforms. But each year it has fallen short of making any meaningful progress.

Most recently, Iran’s President Hassan Rouhani and his supporters have called for new rules and regulations that would put Iran on track with international standards. Ayatollah Khamenei and hard liners, on the other hand, have expressed opposition to the Financial Action Task Force’s standards, citing concerns that the reforms were instruments of the West. (To be fair, it took Pakistan more than four years to come into compliance with FATF standards after committing to an action plan.)

By February 2019, the Financial Action Task Force expects Iran to implement all of its commitments or else the task force will “take further steps to protect against the risks emanating from deficiencies in Iran’s AML/CFT regime.” Whether this means a recommendation that countries take countermeasures against Iran or perhaps another delay is entirely up to Iran.

Is Iran getting a pass? Since May, EU leaders have been scrambling to keep the Iran nuclear deal intact. Leading proposals include establishing a “special purpose vehicle,” which would essentially act as an intermediary between EU businesses and Iran that would help transactions avoid US sanctions.

In other words, this means the establishment of an alternative payment system that avoids the US financial system. Anticipating such a move, Secretary Mnuchin  has already threatened to sanction the “special purpose vehicle” should EU companies use it to avoid US sanctions. For its part, in August, the European Council had tried to prepare for the effects of such a US move by updating its own “Blocking Statute,” which gives EU businesses a legal avenue to recoup damages from US secondary sanctions.

But it would be difficult (if not impossible) for European leaders to continue trying to salvage the JCPOA while also telling its banks that they must employ countermeasures against Iranian transactions as a result of the Financial Action Task Force’s designation of Iran as a “high risk and non-cooperative” jurisdiction.

Although it remains to be seen whether or not the Iran nuclear deal is salvageable, there are few incentives left for Iran to implement anti-money laundering reforms. For better or worse, the Financial Action Task Force and the future of the JCPOA have become politically intertwined as a consequence of US unilateral sanctions. On one hand, the task force has given EU leaders the political latitude to push back against US sanctions—at least for the next four months, during which the European Union will not require its banks to take active countermeasures against Iran. On the other hand, the decision sends the wrong signal to the international community—that international norms and standards are taking a backseat to geopolitics.

FATF to review Myanmar over money laundering concerns

By THOMAS KEAN | FRONTIER

YANGON — An assessment of Myanmar’s efforts to tackle money laundering and terrorist financing has found significant weaknesses, including a failure to recognise the “serious” money laundering risks that the country faces.

The Asia/Pacific Group on Money Laundering released the Mutual Evaluation Report on October 22, three months after it was adopted at the APG annual meeting in July.

The “poor results” on the evaluation mean Myanmar will automatically be reviewed by the International Co-operation Review Group of the Financial Action Task Force, and may be placed on a black or grey list following that review.

Myanmar was removed from the FATF’s list of high-risk and monitored jurisdictions in 2016 following some limited reforms.

Major improvements needed

The Mutual Evaluation Report found that despite Myanmar being exposed to “a large number of very significant” money laundering threats, the authorities did not demonstrate a “credible understanding” of the risks.

Myanmar needed to make “major improvements” in a range of areas, including investigation and prosecution of money laundering and terrorist financing, and confiscation of the proceeds of crime.

Money laundering investigations are “not prioritised” and typically occur only after the successful prosecution of a related offence, such as drug trafficking, in order to identify and confiscate assets, the report said. As a result, only a tiny proportion of overall proceeds of crime are confiscated, and investigations are not pursued beyond Myanmar’s borders.

Myanmar was also taken to task for its failure to pursue international cooperation, particularly in regard to money laundering, but the country fared somewhat better in regard to tackling terrorist financing.

The evaluation was based on information provided by Myanmar and gathered by an evaluation team during a visit to Myanmar in late 2017.

The APG is one of nine regional bodies that work with the FATF to combat money laundering, the financing of terrorism and the financing of the proliferation of weapons of mass destruction.

Myanmar spent more than a decade on an FATF blacklist for non-cooperative states until 2016. In June of that year it was removed due to the “significant progress” it had made in establishing the legal and regulatory framework to meet commitments regarding the strategic deficiencies identified by the FATF in February 2010, the organisation said.

The decision to remove Myanmar followed a brief field visit, the Myanmar Times reported at the time, but the Mutual Evaluation Report is a more rigorous assessment of whether the country is tackling money laundering and terrorist financing.

Crime a US$15 billion business

By Myanmar’s own estimate, proceeds of crime are likely to total around US$15 billion a year, or around 24 percent of GDP.

A national risk assessment drafted with International Monetary Fund support as part of the mutual evaluation process estimated that 63 percent of this figure was derived from tax and excise evasion, environmental crime, and corruption and bribery.

Almost 50 percent of proceeds were generated by activities carried out by transnational crime groups and another 35 percent by domestic organized crime, the assessment estimated. Between 30 and 40 percent of the proceeds of crime is believed to flow out of Myanmar each year, with China and Thailand thought to be the main destinations.

The national risk assessment acknowledged that law enforcement agencies were “not very effective” at conducting money laundering investigations, and were hampered not only by a lack of resources and training, but also a perception that officers could be bribed.

The Mutual Evaluation Report said Myanmar’s risk assessment appeared to “under-rate the significance of drug production and trafficking, as well as the role of corruption in predicate crimes and money laundering”. There was also no analysis of how proceeds of crime are laundered within Myanmar, it noted.

Improvements from a low base

Of the 40 counter-measures against money laundering recommended by the Financial Action Task Force, Myanmar was deemed to be in compliance with only six, largely compliant with 10, partially compliant with 18 and non-compliant with six.

It was evaluated as non-compliant on a recommendation concerning money and value transfer services, largely due to the lack of regulation in relation to the informal remittance network known as hundi.

Similarly, Myanmar was deemed non-compliant on a recommendation concerning Designated Non-Financial Business or Professions, partly because of the operations of unlicensed casinos.

Jurisdictions that are deemed to have achieved “poor results” on the evaluation by meeting at least one of four criteria – for example, being non-compliant or partially compliant on 20 or more of the 40 recommendations – are automatically referred to the ICRG for review. Myanmar met three of four criteria for review.

If Myanmar is prioritised by the ICRG, it will have to agree on an action plan with the group requiring it to take actions to rectify deficiencies and report directly to the FATF on the progress made within a specified time frame. It may then be added to the FATF’s list of high-risk and other monitored jurisdictions, which presently includes only North Korea and Iran.

However, the 2018 Mutual Evaluation Report still represented a significant improvement on Myanmar’s last evaluation in 2008, when it was compliant or largely compliant on only four recommendations.

Among the steps that Myanmar has taken are the introduction of a revised money laundering offence in 2014 and a revised terrorist financing offence the following year. Organisational changes to a number of government bodies has led to “changes and some improvements”, the evaluation noted.

However, the Mutual Evaluation Report said most of the reforms undertaken to address money laundering and terrorist financing risks appeared to be “ad hoc” and aimed at being removed from the FATF black list rather than addressing identified money laundering risks.

Bitcoin’s ‘First Felon’ Faces More Legal Trouble

Charlie Shrem went to prison in 2015 after he pleaded guilty to helping people buy drugs online. Now he’s being sued by the Winklevoss twins.

SAN FRANCISCO — Over the last year, Charlie Shrem, a 28-year-old Bitcoin investor, has bought two Maseratis, two powerboats — one of them 32 feet long — and a $2 million house in Florida, along with smaller pieces of real estate.

In the world of cryptocurrencies, where millions can be made and lost in a day, that might not make Mr. Shrem stand out. But unlike most Bitcoin entrepreneurs, in 2016 Mr. Shrem got out of prison, where he spent a year after pleading guilty to illegally helping people turn dollars into Bitcoin to buy drugs online.

Mr. Shrem, who had been the chief executive of Bitinstant, one of the first prominent Bitcoin businesses in the United States, has said in recent interviews that he went to prison with almost no money.

So where did the money for the expensive toys come from? That’s what two former business partners want to know.

Cameron and Tyler Winklevoss, the twins who turned money from a settlement with Facebook’s Mark Zuckerberg into a Bitcoin fortune, said they suspected Mr. Shrem had actually been spending Bitcoin that he owed them since 2012, according to a lawsuit unsealed in federal court on Thursday. The Bitcoin would be worth around $32 million at current prices.

“Either Shrem has been incredibly lucky and successful since leaving prison, or — more likely — he ‘acquired’ his six properties, two Maseratis, two powerboats and other holdings with the appreciated value of the 5,000 Bitcoin he stole from” the Winklevoss twins in 2012, the lawsuit says.

The judge who oversaw Mr. Shrem’s earlier trial has already agreed to freeze some of Mr. Shrem’s financial assets, according to court documents.

The lawsuit could blossom into an even bigger problem for Mr. Shrem because an affidavit filed in court suggests that Mr. Shrem has also not paid the government $950,000 in restitution that he agreed to as part of his 2014 guilty plea.

Mr. Shrem’s lawyer, Brian Klein, said in a statement that the claims by the Winklevoss brothers were baseless. “The lawsuit erroneously alleges that about six years ago Charlie essentially misappropriated thousands of Bitcoins,” he said. “Nothing could be further from the truth. Charlie plans to vigorously defend himself and quickly clear his name.”.

The lawsuit from the twins threatens another reversal of fortune for Mr. Shrem, who went from being one of the earliest Bitcoin millionaires to being called Bitcoin’s “first felon.”

When he was arrested in 2014, Mr. Shrem was accused by federal authorities of using his company, Bitinstant, to knowingly sell Bitcoin to people who wanted it to buy drugs from the online black market, Silk Road.

Since his release in 2016, Mr. Shrem has said in numerous interviews that he recognizes his past mistakes and wants to cut a new and legal path. On the podcast “Love, Sex and Money,” Mr. Shrem said that in the first months out of prison, he worked as a dishwasher and didn’t look at his email.

Over the last year, though, Mr. Shrem, has already gotten involved with a number of troubled projects.

He was among the leaders of two efforts — one a cryptocurrency credit card and the other an initial coin offering — that had to give money back to investors after various partnerships that Mr. Shrem had promised fell through.

But those are likely to be mere headaches compared to what he could face in a confrontation with the Winklevoss twins. Mr. Shrem helped get the brothers interested in Bitcoin in 2012 and became their first adviser in the young industry.

A few months into this partnership, the twins said they realized that Mr. Shrem had not given them all the Bitcoin they were due. The brothers gave Mr. Shrem $250,000 in September 2012, but the lawsuit says that a month later, he only delivered around $189,000 worth of Bitcoin at the going price, which was around $12.50 at the time.

The 5,000 or so missing Bitcoins became a point of tension between the twins and Mr. Shrem. They asked him numerous times for an accounting of the Bitcoins he had purchased and eventually brought in an accountant who documented the missing funds, according to court documents.

“I have been patient and at this point, it’s getting a bit absurd,” Cameron Winklevoss wrote to Mr. Shrem in 2013 in an email quoted in the lawsuit. “I don’t take this lightly.”

The missing Bitcoin, which were worth 98 percent less at the time, appeared to have been forgotten in a broader battle between the brothers and Mr. Shrem over an investment in Bitinstant.

In 2013, Bitinstant fell apart and the twins blocked Mr. Shrem’s efforts to revive the company with new investors because of their concerns about his management style. By the time Mr. Shrem was arrested in 2014, as a result of activities at Bitinstant that took place before the brothers invested, they had cut off contact with him.

The Winklevoss twins’ problems with Mr. Shrem have not held them back. They were briefly each cryptocurrency billionaires last year, and they have built one of the leading cryptocurrency exchanges, Gemini. Despite this year’s big drop in cryptocurrency prices, their holdings are still worth nearly a billion dollars.

Cameron Winklevoss said that he and his brother decided to pursue the missing Bitcoins again after they saw Mr. Shrem’s recent spending patterns.

“When he purchased $4 million in real estate, two Maseratis, and two power boats, we decided it was time to get to the bottom of it,” Mr. Winklevoss told The New York Times.

The brothers hired an investigator, who found that 5,000 Bitcoins were transferred in 2013 through addresses associated with Mr. Shrem and onto the Bitcoin wallet services Xapo and Coinbase, according to the complaint. The investigator traced the money on the blockchain, the public ledger where all Bitcoin transactions are recorded.

Jed S. Rakoff, a judge in the Federal District Court for the Southern District of New York, approved an application the twins made in September to freeze any funds that Mr. Shrem holds with those companies. Judge Rakoff wrote in his order that Mr. Shrem had “evidenced an intent to frustrate the collection efforts of his creditors.”

The court fight could cause problems for Mr. Shrem’s latest venture, a firm called Crypto.IQ. The company, which promises market intelligence to Bitcoin traders, is holding a conference for customers in Las Vegas this month promising “unparalleled insights from a roster of experts at the very epicenter of the crypto universe.”

In an interview with Breaker magazine last month, Mr. Shrem said he was getting used to the ups and downs.

“My personal life goes through bull and bear markets, too,” he said. “So the key is how to deal with it when you’re in the bear markets.”

Security minister reveals knowledge of football money-laundering investigation

Ben Wallace says the sports industry “is as susceptible as anything else” to being used to hide the source of dirty money.

New York Red Bulls made the play-offs by beating Montreal on Saturday evening
‘I know of (a) professional football club or clubs under investigation,’ Mr Wallace said

A professional football club or clubs are being investigated over allegations of money laundering, a minister has said.

Security minister Ben Wallace told the treasury select committee that the sports industry “is as susceptible as anything else” to being used to hide the source of dirty money.

Committee member and Labour MP John Mann asked Mr Wallace: “When it comes to money laundering, how many professional football clubs have been deemed as requiring investigation currently?”
Ben Wallace arrives at Downing Street
The minister said it can take years for money laundering investigations to finish

The minister replied: “I know of (a) professional football club or clubs under investigation.

“I couldn’t reveal how many and what they are, for that is an operational matter.”

When he was pushed to give the number involved, Mr Wallace said: “There are live investigations that go on all the time and to expand any more could threaten investigations.

“The sports industry is as susceptible as anything else to dirty money being invested or their organizations being used as a way to launder money.”

Mr Wallace told the MPs it can take years for investigations into money laundering to be finished.

He said suspicious activity reports, a means of giving information to police about potential criminal activity by customers or clients, should be made “by anyone” and not just banks.

“Not enough” had been reported by the football authorities, Mr Wallace told the committee.

A National Crime Agency spokeswoman said: “We do not routinely confirm or deny the existence of investigations.”

“We have not charged any professional football clubs with money laundering, and there are none currently in the court process.”

https://news.sky.com/story/security-minister-reveals-knowledge-of-football-money-laundering-investigation-11540039

Bitcoin [BTC] worth $5.84 million stolen from MapleChange; Binance CEO gives his insight

MapleChange, a Canada-based cryptocurrency exchange, recently announced that their platform was hacked. The exchange platform took to their Twitter handle to provide clarity on the situation, stating that they could not refund the stolen cryptocurrencies.

According to their official post, a bug on the platform enabled a group of hackers to withdraw funds remotely. The platform reported that 913 Bitcoins [BTC] were stolen and that they cannot refund any of the funds until a “thorough investigation” was conducted.

Another controversial aspect was that the “thorough investigation” resulted in the exchange platform realizing that they did not have funds for repaying its users. Furthermore, they stated that the platform would not function anymore and that they would soon deactivate their social media channels. Their official post stated:

“We have sustained a hack, and we are investigating the issue.”

On their official Twitter handle, the exchange stated that they had not “disappeared”, but had temporarily turned off their accounts to think of a solution.

In addition, they could not refund “everyone with all their funds”, but would soon open wallets in order to allow its users to “hopefully” withdraw whatever funds were left on the exchange. They added:

“We CANNOT refund any BTC or LTC funds unfortunately. We will try our best to refund everything else.”

Changpeng Zhao, the CEO of Binance, the world’s largest cryptocurrency exchange in terms of trading volume, was surprised by the hack and stated that a procedure was required to rank exchanges based on their wallet storage. He added that users had to avoid using exchange platforms which did not have anything in their cold wallets.

Maplechange’ed, a platform dedicated to find, take down and expose maplechange.com, with the help of members from the Lumeneo [LMO] telegram channel, allegedly found that Glad Poenaru, a service technician at American Piledriving Equipment, could have been responsible for the hack.

Joseph Young, a cryptocurrency investor and analyst, stated:

“A small crypto exchange pulled off an exit scam, taking all customer funds. There is no incentive for using small exchanges. Use established exchanges that are regulated, & transparent. Small exchanges also focus on maximizing profitability, not security or investor protection.”

MapleChange further added:

“We are sending all of the coin developers the wallets containing the coins we have left. So far, LMO and CCX have been handed over the funds.”

https://ambcrypto.com/bitcoin-btc-worth-5-84-million-stolen-from-maplechange-binance-ceo-gives-his-insight/

How The Unexplained Wealth Order Combats Money Laundering

The UK is a haven for dirty money; more than £90 billion is estimated to be laundered through the country per year. The size of the UK’s financial and professional services sector, its open economy and the attractiveness of the London property market to overseas investors all make it unusually exposed to international money laundering risks. As part of new measures to tackle asset recovery and money laundering, the UK government introduced Unexplained Wealth Orders (UWOs) in January, which are being hailed as the cure to Britain’s dirty money problem.

What is an Unexplained Wealth Order?

UWOs require the owner of an asset worth more than £50,000 to explain how they were able to afford that asset. Introduced primarily to target Russian and Azerbaijan laundromats, UWOs have wide-ranging applications to all situations where the National Crime Agency (NCA) believes wealth was acquired illicitly, including tax evasion.

The game-changing nature of UWOs lies in the power they give UK law enforcement to prosecute. Formerly, little could be done to act on highly suspicious wealth unless there was a legal conviction in the country of origin. In cases where the origin country is in crisis or the individual holds power within a corrupt government, this is unlikely to be achieved. Where previously law enforcement agencies needed to prove in court that an asset was purchased with laundered funds, UWOs shift the burden of proof away from prosecutors and on to the asset’s owner.

Preventing Financial Crime with Unexplained Wealth Orders

The first successful use of a UWO since its implementation is the recent case of Zamira Hajiyeva, who owns millions of dollars in properties in London through offshore companies. Her husband, Jahangir Hajiyev, was convicted and sentenced to 15 years in prison for fraud and misappropriation of public funds, and authorities were able to identify a clear disparity between his income and the couple’s apparent wealth.

With corruption watchdog Transparency International estimating that £4 billion of UK property has been purchased with the proceeds of crime, it is hoped that this successful implementation of a UWO will herald a clampdown on overseas criminals laundering via the property market.

The success of this UWO has been fundamental in beginning to reduce the appeal of the UK as a destination for illicit income. In June, mortgage brokers were already reporting that Russian purchases of prime real estate in London had slowed as a result of both government pressure and a tightening of anti-money laundering rules.

There are, however, reasons to be wary of perceiving the introduction of UWOs as a cure-all for the UK’s money laundering problems. These court orders are ineffective as soon as a defendant can provide an explanation for the source of their wealth. In the absence of evidence to the contrary, they then win the argument. Legal difficulties and costs are other factors that can lead to delays in the UK’s fight against money laundering, while information obtained via a UWO cannot be used in criminal proceedings against the respondent. For UWOs to have credibility, authorities will need to ensure the first uses of them continue to be successful in order to serve as a useful deterrent going forward.

Further, money laundering covers a wide range of criminal activity and consequently can’t be solved by a single approach. Fragmented supervision and anonymous ownership of property in British Overseas Territories and Crown Dependencies are just two areas where Transparency International is still advocating for change to improve the UK’s asset recovery and anti-money laundering regime.

How Can We Continue to Fight Money Laundering?

It is clear that UWOs have the potential to act as powerful tools for law enforcement but are not yet being used frequently enough— more action is required if real change is to come. We need further action from the government to restrict property ownership and levy realistic local taxes.

With UWOs beginning to lead to the identification of criminals, questions will be asked of the financial institutions who facilitated the individual’s money management. To better equip themselves for the fight against money laundering, banks need to overhaul outdated AML systems to suit the complexity of the schemes perpetrated by criminals. They need to combat problems by employing entity resolution and network analysis techniques to understand vast data networks and identify hidden money.

https://www.forbes.com/sites/vishalmarria/2018/10/25/how-the-unexplained-wealth-order-combats-money-laundering/#26a904a54703

How One Stubborn Banker Exposed a $200 Billion Russian Money-Laundering Scandal

TALLINN, Estonia—It took a £1 payment to uncover one of the world’s biggest money-laundering scandals.

Howard Wilkinson, a British trader at a Danish bank’s branch in Estonia, noticed that a London business, which moved more than $1 million through the branch almost daily, had filed a report with the U.K. government claiming it had no income or assets. Downloading the report cost Mr. Wilkinson one pound.

It is a money-laundering scandal on a grand scale, broaching one of the West’s rawest subjects, its tense relationship with Russia. The money involved is equal to more than all the corporate profits in Russia in a year. The scandal has tarred the reputation of Denmark, a country ranked among the world’s most transparent, and wiped out nearly half the stock-market value of the Scandinavian country’s largest bank, which knew about the problems for years before they became public. Its star CEO has resigned.

The revelations have ignited soul-searching in Europe about the cost incurred by some of its banks to survive the global financial crisis, especially how they welcomed flows of thinly monitored money from countries with weak rule of law. Regulators increasingly wonder whether their defenses against criminal money are broken, given how so much moved through the brand-name bank of a Scandinavian nation.

Danske Bank’s Estonia office, a building once used by the Nazi military to produce radios and by the Soviets for tank parts.
Danske Bank’s Estonia office, a building once used by the Nazi military to produce radios and by the Soviets for tank parts. PHOTO: INTS KALNINS/REUTERS

The U.S. Department of Justice has started a criminal investigation into the Danske matter, and the Treasury Department and Securities and Exchange Commission are also investigating. Following Danske’s September release of a report on its internal investigation, shareholders are bracing for the possibility of a huge fine. The bank says it still doesn’t know whose billions moved through the remote branch over nearly a decade.

From his home in the English countryside, Mr. Wilkinson, 47 years old, said that he had no idea of the scale when he first began poking into a few of his bank’s dealings. He described himself as shocked and disillusioned.

“If you wanted to launder money all you need to do is find an obscure branch in a bank with a good name,” he said. “And nobody is going to ask you any questions.”

Pile-up

As the investigations of wrong-doing have piled up, Danske’s stock price has suffered.

A Wall Street Journal review of hundreds of pages of internal bank documents, including memos and client records, along with interviews with dozens of officials and bankers involved with Danske’s Estonian operations reveals how a multibillion-dollar money-laundering pipeline remained open for years, and how a midlevel career banker, fixated on detail, finally brought it down.

“We want to make it absolutely clear that this case in no way reflects the bank we want to be,” Danske said in a written statement after being asked about the Journal’s findings. “We will do everything it takes to ensure that we never find ourselves in the same situation again.”

“Good, Easy Money”

The chief executive of Denmark’s biggest bank thought he was about to die in a plane crash. Peter Straarup’s flight to Copenhagen had lost cabin pressure and was dropping thousands of feet toward the Baltic Sea.

It managed a safe emergency landing, but Mr. Straarup later described the 2006 incident to a friend as a portent of the trouble ahead. He was returning from Helsinki to announce that Danske would take over Finland’s Sampo Bank and absorb its million customers.

The acquisition came with a little-mentioned subsidiary in Estonia headquartered in a six-story former factory with an unhappy history. Hitler’s military produced radios in the building before the Soviets repurposed it for tank components. After communism’s collapse, a new bank, named Eesti Forekspank, took over the building.

During a 2006 visit, Russian Central Bank Deputy Chairman Andrei Kozlov, who was conducting a crackdown on money laundering, complained to Estonian officials that the bank, which had changed hands a couple of times, was servicing customers suspected of financial wrongdoing such as tax evasion or corruption. Three months later, he was gunned down as he left a soccer match. A Russian court ruled it was a contract killing ordered by a businessman displeased with his laundering crackdown.

Two months after that, in November 2006, Danske agreed to buy the bank as part of its deal for Sampo Bank, which owned it. Mr. Wilkinson became an employee weeks later.

An Oxford graduate who had traveled the Nordics, he initially went to work at a bank in Finland, where former colleagues remembered him as a skilled but argumentative trader who once started a yearlong gripe over a monthly charge on his checking account.

Estonia offered a faster pace than Finland. The markets department Mr. Wilkinson led, with nine employees on the corner of the fourth floor, traded millions of dollars daily in currency and bonds, called “flow business.” In the years after the financial crisis, some European banks were in fragile shape—Danske had state help—but its Estonia branch was reporting strong results for such a small country.

The Englishman felt at home in the open-plan office with its international mix of youthful new hires and experienced bankers. He didn’t entirely understand its business model, though. Ninety percent of Danske’s Estonia profits, an internal memo would later explain, came from a department on the third floor, which served a lucrative customer type Mr. Wilkinson had never dealt with before, termed nonresident depositors.

Those customers didn’t live in Estonia, and their companies did little business there. Most were Russian, and their reasons for banking in tiny Estonia weren’t always evident. Many of the nonresident depositors yanked incoming money out of their accounts within days of its arrival, sometimes hours.

Little Place, Big Money

More than €500 billion in cross-border payments entered tiny Estonia between 2008 and 2017, with a similar amount exiting. The country’s GDP for the same period was only €184.9 billion.

Mr. Wilkinson managed market transactions related to those customers, mostly currency trades and buying and selling treasuries. “Good, easy money,” he called it. Returns on equity approached 400%, a bank memo said.

His first hint of unease came five years into the job, as his colleagues rushed to take their summer 2012 holidays. A young junior account manager asked for help wrapping up paperwork on a British client.

The client—listed in the U.K. as Lantana Trade LLP—was registered next door to a suburban London hardware store, according to documents. They show it had moved $480 million through the Estonian branch in about five months.

When Mr. Wilkinson downloaded the business’s records, what he saw made no sense. “Net Assets,” said a filing it made to Companies House, the British registrar that collects company data: “0.00.”

A simple clerical error, Mr. Wilkinson said a bank compliance officer reassured him weeks later, adding that Danske had asked Lantana to submit a new, correct version to Companies House. He forgot about it.

A year later, in September 2013, a senior bank official said Lantana was no longer a client, Mr. Wilkinson said. He added that another official told him that one of Lantana’s owners was a relative of Vladimir Putin, which was denied by a spokesman for the Russian president. Lantana couldn’t be reached.

“It sat in the back of my head that there was something that wasn’t quite right,” Mr. Wilkinson said.

“The Alpha Male”

Danske’s excellent returns from Estonia were helping power the rise of a tall and elegant gray-haired banker several rungs above Mr. Wilkinson, who championed the Estonian branch’s business before the board of directors.

Thomas Borgen, then in charge of international banking for Danske, impressed other executives with his ramrod posture and soothing intonation, colleagues recalled. “He’s extremely charismatic…unquestionably the alpha male in the room,” said an adviser to a board member.

The Estonian branch’s profits were a point of pride during a European business slump. “This was his baby,” the adviser said.

In 2010, Mr. Straarup, Danske’s CEO, grew concerned about the high level of Russian transactions going through the branch. Barron’s magazine had contacted the bank about the possible involvement of its Estonian branch in a North Korean arms-smuggling case in Thailand, although the ensuing article didn’t identify the bank.

Months later, Mr. Straarup asked Mr. Borgen: Was he comfortable with the exposure to nonresident clients? Mr. Borgen, according to a person who attended the meeting, said he hadn’t come across any cause for concern. Mr. Straarup declined through a spokesman to comment, and Mr. Borgen didn’t respond to requests for comment.

Thomas Borgen, center, stepped down as CEO of Danske Bank after its investigation of a money-laundering scandal at its branch in Estonia.
Thomas Borgen, center, stepped down as CEO of Danske Bank after its investigation of a money-laundering scandal at its branch in Estonia. PHOTO: MADS CLAUS RASMUSSEN/SCANPIX/AGENCE FRANCE-PRESSE/GETTY IMAGES

Russia’s central bank, which maintained a measure of independence in a country sliding into autocracy, kept a blacklist of hundreds of thousands of individuals barred from Russia’s banking sector on suspicion of financial crimes. Many of those people were popping up as clients of the Danske branch next door in Estonia, the Russian central bank complained to Estonia’s banking supervisor, the Financial Supervision Authority.

Estonia’s FSA had just two employees to conduct money-laundering reviews, one of them part-time. It took six months to assess a single bank’s practices, and larger banks than the local Danske branch had priority. Estonia’s maximum fine for money laundering was €32,000—a few hours’ worth of profits at the branch.

In addition, European Union directives discouraged Estonian inspectors from entering the bank building without permission from their Danish regulatory counterparts. Denmark’s FSA oversaw the business because Danske had made it a branch rather than a subsidiary.

The Estonian regulators, despite their limited jurisdiction and resources, raised red flags, mailing about six letters to Denmark’s FSA between 2007 and 2014. The complaints became caustic as years went by.

One Estonian FSA letter “is brutal…close to the worst I have ever read…and I have read some harsh letters,” a Danske compliance officer emailed a colleague.

Denmark’s FSA says it raised the Estonian regulators’ concerns with Danske Bank and was assured that the bank regularly sent people to check the branch and they found no problems.

Danske, meanwhile, was hoping to open a U.S. branch. In late 2012, Denmark’s FSA issued a statement of support to the Federal Reserve saying that Danske followed correct anti-money-laundering procedures.

Danske’s anti-money-laundering chief later emailed colleagues about issues at the Estonian branch, saying: “The Danish FSA has helped the Bank in a critical situation. They are now very worried that any situation may arise.”

Danske and the Federal Reserve declined to comment when asked about the exchange.

In 2013, Mr. Borgen, the charismatic chief of international banking, became Danske’s CEO. “People were in awe of” Mr. Borgen, a person close to the board said. “He was producing these enormous returns.”

At a meeting that year of the European Banking Authority, with top officials from across the Continent present, a shouting match erupted, said people familiar with the session. The Estonians yelled across the room that criminal Russian money was washing through their country, and Denmark, a founding member of NATO, was doing little to stop it.

“In simple terms, we were quite pissed off,” said Raul Malmstein, then-chairman of Estonia’s FSA. “They were not doing anything.”

Former Danske employee Howard Wilkinson.
Former Danske employee Howard Wilkinson. PHOTO: CHRISTOPHER NUNN FOR THE WALL STREET JOURNAL

Mr. Wilkinson’s daughters had finished opening their presents on Christmas 2013 when, in the holiday calm, a thought buried deeply away came to mind. Had Lantana—the London business that moved millions through the Estonian bank while listing its assets as zero—properly amended its filing to U.K. authorities, as he’d been told 18 months before?

The day after Christmas, Mr. Wilkinson spent another pound to download Lantana’s amended filing. On the third page, Lantana said that as of as of May 31, 2012, its bank accounts held £15,689, equal to about $20,500. Bank records showed it had close to $1 million on deposit with Danske that day.

Lantana had replaced one lie with another. Worse, some of Mr. Wilkinson’s colleagues probably knew, he guessed. “At that point there’s a problem, and the question is how big is the problem,” he said.

The next morning, before dawn, Mr. Wilkinson emailed four Danske officials in Copenhagen, with the subject “Whistleblowing disclosure — knowingly dealing with criminals in Estonia branch.”

“Dear Sirs,” he wrote. “The bank may itself have committed a criminal offence…. There has been a near total process failure.”

Mr. Wilkinson imagined Danske’s executives would investigate his allegations, make changes, and they’d all share a pleasant handshake.

Two days later, a bank executive dashed off a terse response on his phone to Wilkinson: “Thanks for drawing our attention to this. It must be investigated asap.”

“regards”

“We’re Not the Police.”

Danske’s executive board met during the first week of 2014, now with Mr. Borgen as CEO. The Christmas whistleblower email was discussed, but board members weren’t provided a copy and it didn’t cause much alarm, according to two people familiar with the meeting.

The board had other incoming items to deal with. JPMorgan Chase & Co. had ceased clearing dollars for the Estonian branch over money-laundering concerns at nonresident accounts. Also, with the financial crisis fading, European banks had less appetite for taking on legally risky clients to obtain deposits. The Estonian branch had proposed a freeze on some new clients deemed too risky, according to a Danske PowerPoint document.

Mr. Borgen offered an alternative plan, said people close to the board: Sell the branch.

Two days after that board meeting, Danske senior management received another email from Mr. Wilkinson. He had checked three more clients. All three had filed false assets and income reports to the British authorities, he wrote.

In Estonia, the Englishman’s campaign infuriated co-workers: “We’re not the police,” a branch executive snapped in one heated meeting, Mr. Wilkinson recalled.

One day around February 2014, Estonian government inspectors barged into the building, without permission from Copenhagen, and pulled thousands of documents. They sent Danske Bank a scathing, 340-page report listing lengthy violations.

The report was in Estonian. It wasn’t translated into English or Danish for another three years.

Danske management did order an internal audit team to do some digging, around the same time. Mr. Wilkinson found the team members motivated and intelligent. They interviewed him at length by phone.

A report the audit team prepared was damning. A summary of it said the Estonian branch wasn’t able to identify the true source of funds—a basic banking requirement—and “therefore acts against [anti-money-laundering] legislatory principles.”

The draft report said the branch’s head of international banking, who helped oversee nonresident accounts, had told the auditors his employees weren’t recording the true owners of the companies because, in the report’s language, “it could cause problems for clients if Russian authorities request information.” The banker couldn’t be reached for comment.

In March 2014, Mr. Wilkinson checked what 12 additional Danske clients had reported to British authorities. Each moved millions but reported scant income or assets. Mr. Wilkinson made a total of four complaints. He didn’t find a single Danske client that correctly reported its income to the government where it was registered.

It took a phone call to break Mr. Wilkinson’s zeal.

Howard Wilkinson at his home in England
Howard Wilkinson at his home in England PHOTO: CHRISTOPHER NUNN FOR THE WALL STREET JOURNAL

The internal audit team’s draft report, the product of a two-month investigation, was being watered down under pressure, an auditor called to tell him. The bank’s auditing chief wouldn’t give Mr. Wilkinson a copy.

The report would permanently remain a draft. If it was made final, Denmark’s banking supervisor would have access to it.

In April 2014, a colleague told Mr. Wilkinson that Estonian branch management had been listening to recordings of his calls with auditors. He felt spooked—and infuriated.

He resigned. “After over seven years with the bank, I’ve decided it’s time to do something else,” he emailed management.

Seconds later, Mr. Wilkinson sent an email he had pre-written to Danske’s chief risk officer: If Danske didn’t report the false accounts to Estonian police, then he would.

Three hours later, the officer responded: “I can assure you that the issues you have raised are receiving a huge amount of attention both locally and in Copenhagen.”

Estonia at the time was ranked as the second-best country on earth in combating money laundering, by a standard called the Basel AML index, while corruption watchdog Transparency International rated Denmark the world’s most transparent country that year. What was unusual, Mr. Wilkinson concluded, wasn’t that a name-brand branch had turned a blind eye to its customers, but that it got caught.

At the end of April 2014, he cleaned out his desk. Danske Bank’s top legal officer hired a consulting firm to investigate allegations of misconduct at the Estonian branch. The hiring decision was overturned by two executive-board members.

In June, the board of directors met. Mr. Borgen had told colleagues two banks were considering buying Danske’s Baltic portfolio, including the Estonian branch. Let the business carry on a bit longer, he said.

“CEO found it unwise to speed up an exit strategy as this might significantly impact any sales price,” the minutes of the meeting say.

Board members swallowed their misgivings, according to people familiar with the session. “Nobody ever disagrees with Thomas,” said one. “He was regarded as the most successful CEO Danske Bank had ever had…. He had steered the bank through a very difficult time.”

“My Own Small Bit”

Danske didn’t find a buyer for the Baltic business. The nonresident business at the Estonian branch carried on for another year. Then, in 2015, Bank of America Corp. and Deutsche Bank AG , the last two correspondent banks still processing U.S. dollar transactions for the Estonian branch, both said they would stop dealing with the branch’s clients on money-laundering concerns. Late that year, Danske pulled the plug on its nonresident business and shut thousands of accounts.

In early 2017, Danish newspaper Berlingske published reports describing Danske Estonia money-laundering schemes. In September of that year, Danske opened an internal investigation.

Mr. Borgen dismissed notions he would have to resign, people close to the board recalled. He told an investor as recently as June there was nearly zero chance Danske would have to pay a significant fine. He expected to stay on after the investigation, people close to the board recalled.

The Danske Bank building in Copenhagen
The Danske Bank building in Copenhagen PHOTO: MADS CLAUS RASMUSSEN/EPA-EFE/REX/SHUTTERSTOCK

As Danske’s investigators, based partly on Mr. Wilkinson’s tips, combed through stacks of transaction records, the scale of the money flows remained a mystery. After a year of work, the investigators had managed to review less than half of the branch’s 15,000 clients.

“The vast majority of these customers have been deemed suspicious,” Danske said in the September report of its internal investigation.

The investigators determined that the branch had handled €200 billion, equal to $233 billion, in largely suspicious transactions. They were unable to figure out who owned the lucrative nonresident companies that banked there. Those clients’ money has long since vanished into a labyrinth of offshore companies around the globe.

The internal investigation mostly exonerated top management, including Mr. Borgen. It accused dozens of low-level employees of wrongdoing.

Mr. Borgen said he would resign as CEO nonetheless. “Danske Bank has failed to live up to its responsibility,” he said. “I deeply regret this.”

Mr. Wilkinson was following events from the kitchen table of his countryside home. Even he was flabbergasted by the scale. “Surreal,” he says.

If he filed any whistleblowing claims to the SEC, there is the possibility under U.S. law he could collect a portion of any fine against the bank. His lawyer declined to comment on whether he has spoken with U.S. or European law enforcement, citing Estonian bank-secrecy laws.

These days, the Englishman looks after his daughters. Sometimes in the evenings, he occupies his mind with a Bletchley Park cipher puzzle book, named after the team of World War II codebreakers that cracked Germany’s secret Enigma encryption.

“I’ve done my own small bit,” he said.

https://www.wsj.com/articles/how-one-stubborn-banker-exposed-a-200-billion-russian-money-laundering-scandal-1540307327