Danske Bank money-laundering case spreads to U.K.

British customers are thought to be part of known Russian and Azerbaijani networks

The U.K. National Crime Agency on Friday said it is probing British ties to a money-laundering scandal at Danske Bank AS, as investigators begin to focus on where some of the $230 billion that washed through a tiny Estonian bank branch ended up.

The NCA said in a statement it has ongoing “operational activity” around the use of U.K.-registered companies by Danske customers who are suspected of illicit activities through the lender’s Estonian branch. A spokesman for the agency said it is specifically investigating one company identified in the scandal, in a civil rather than criminal probe. He declined to name the company involved in the probe.

In a report this week, Danske Bank said U.K. companies were among the thousands of suspicious customers it identified at the branch, and that some of the British customers are thought to be part of known Russian and Azerbaijani money-laundering networks.

Danske Bank Chief Executive Thomas Borgen resigned Wednesday as the report chronicled how thousands of accounts churned hundreds of billions of euros through Estonia, a former Soviet Republic. Danske Bank said customers it has identified as suspicious include Russian individuals and companies blacklisted in their home country for suspected financial wrongdoing, and numerous companies registered in the U.K. and the British Virgin Islands.

The government itself has said U.K. shell companies are a weak spot in the prevention of financial crime. Setting up such companies and opening bank accounts is cheap and easy, with few, if any, checks made on their ultimate owners.

The U.K. recently has attempted to clamp down on abuse, making public in 2016 its register of company owners, and introducing a raft of new laws aimed at keeping dirty money out of the country. Graham Barrow, an antimoney-laundering consultant studied some of Danske Bank’s suspicious transactions for Denmark’s Berlingske newspaper, whose reporters had access to some of the bank’s records. He found $1 billion flowing through the Danske account of a single U.K. limited liability partnership, or LLP, over a 14month period. Some of its counterparties were other U.K. LLPs registered to the same address.

The NCA in its statement said the use of U.K. company structures as a route for money laundering is “widely recognized” and that it is working with other government agencies on its crackdown.

Those efforts include greater oversight of professional enablers such as lawyers, accountants and company formation agents, and the use of “unexplained wealth orders” for property owners whose source of wealth isn’t apparent.

U.S. law enforcement agencies are studying the Danske Bank case and have received information from Danish and Estonian authorities, The Wall Street Journal reported last week. Denmark and Estonia have opened criminal probes.

The NCA, an agency akin to the Federal Bureau of Investigation, has said there is no reliable estimate of how much money is laundered through the U.K. each year, but that hundreds of billions of pounds is a “realistic possibility.”

Starting Oct. 31, it and other law-enforcement agencies including the Serious Fraud Office and the Financial Conduct Authority will aim to tackle bribery, corruption and money laundering through a joint unit called the National Economic Crime Center.