Russian president Vladimir Putin’s family members and the FSB, Russia’s intelligence service, have been linked to the laundering of substantial amounts of money through the Estonian branch of Denmark’s biggest bank, according to a new report in a Danish business newspaper.
Whether those funds made their way to the west and were used in the United States or elsewhere is unknown. But Special Counsel Robert Mueller is reportedly investigating whether Russian money was funneled to groups, directly, or indirectly, involved the 2016 presidential campaign.
Questions have also been raised whether Donald Trump aided Russian money laundering by selling real estate to individuals with ties to Putin, the FSB, or both, through all-cash transactions involving secretive corporations.
Since Trump’s election as president, 70 percent of his company’s property sales have been made to limited-liability corporations (LLCs), according to USAToday. LLCs are often used to conceal the true property owners.
Since the 1980s, more than 1,300 condos worth around $1.5 billion, either owned or licensed by Trump, were bought by shell companies in all-cash transactions. That amounts to 21 percent of the Trump Organization’s condo sales in the United States, according to an investigation by BuzzFeed.
Putin’s connection to the Denmark bank was first discovered by a “whistleblower,” who detailed his finding in a 2013 report submitted to the bank’s top management in Copenhagen. But the details of that report have only recently come to light, according to Danish newspaper Berlingske Business.
The report states that individuals behind a suspicious company which held accounts at Danske Bank’s Estonia branch were making “suspicious payments” that involved “the Putin family and FSB”.
The report named Putin’s cousin, Igor Putin and a number of individuals closely linked to top officials of the FSB, the newspaper reported.
The detailed report, examined by the newspaper, warned Danske Bank’s management that the bank “may itself have committed a criminal offence,” “has likely breached numerous regulatory requirements,” “behaved unethically” and likely was “helping to launder money.”
The whistleblower also pointed to a “near total process failure” in the branch’s anti-money laundering controls.
“This new information shows that this is a completely unique case with foreign-policy ramifications that go almost far beyond anyone’s imagination,” said Jakob Dedenroth Bernhoft, Chief Executive of the advisory firm Revisorjura.dk
“Just when you thought this money laundering case couldn’t get any more serious for Danske Bank, it did,” said Bernhoft, an expert on anti-money laundering regulations.
The bank acknowledged that anti-money laundering controls were too insufficient back then to prevent the Estonian branch from “potentially being used for money laundering.” Following reports of specific money laundering instances, bank CEO Thomas Borgen launch an extensive investigation last year.
The whistleblower‘s report was sent to Robert Endersby, then the head of the bank’s credit and risk management team, who was considered Borgen’s right-hand man. The report was also sent to Ivar Pae, head of Danske Bank’s Baltic activities, as well as executives responsible for Danske Bank’s anti-money laundering efforts and the bank’s internal audit function, the newspaper said.
According to the report, the Estonian branch became aware in the summer of 2013 that a bank customer, Lantana Trade LLP, a UK-registered company, had made false representations in its financial accounts to British authorities.
The company reported extremely low turnover figures and was registered as being inactive despite a daily flow of large sums of money through the company’s bank accounts. The company was also making “suspicious payments”, and the branch did not hold sufficient information about “who the beneficial owners were,” according to the whistleblower’s report.
The branch began an investigation of Lantana Trade LLP and about 20 associated companies that were frequently transferring large amounts to each other across accounts held with Danske Bank Estonia.
According to the whistleblower’s report, “Putin family and FSB” were involved in the company along with “beneficial owners” who have been “involved with several Russian banks that had been closed down in recent years.” The banks were linked with “large, suspicious sums of money flowing out of these banks and out of Russia.”
During the investigation, bank branch executives reportedly received death threats and threats of financial ruin. Nonetheless, Lantana’s accounts and those of some 20 associated companies were closed.
As it turns out, several of the companies–identified as IC Financial Bridge, Cherryfield Management, Chadborg Trade and Ergoinvest— were involved in international money laundering scandal last year involving Germany’s Deutsche Bank, where Trump and family members have extensive financial ties.
In that case, the companies were found to have carried out large-scale money laundering by engaging in a process known as mirror trading, involving the use of stock trades, according to the Danish newspaper.
Money & Power reported a year ago in February that Trump and family members have deep ties the German bank.
The U.S. Justice Department investigated the bank for laundering Russian money at the same time the bank was loaning Trump hundreds of millions of dollars for real estate projects under “unusual circumstances,” according to bankers with knowledge of the loans.
The loans were made to Trump at a time when no other United States bank would lend him money following four major bankruptcies.
Igor Putin, Russian middleman Alexei Kulikov and individuals associated with the FSB are also alleged to have been behind the fraud involving Deutsche Bank, according to Bloomberg and The New Yorker.
Experts told the Danish newspaper that money laundering likely involved stolen or embezzled money or the proceeds from bribes. The laundering operation may also have been set up to get around U.S. sanctions on Russian businesses linked to Putin. Much of the money was in U.S. denominated currency.
The Treasury Department’s financial crimes unit says shell companies and cash purchases are two of the most common ways of laundering money through real estate, according to an advisory sent to financial institutions and real estate firms.
Buying with cash lets criminals bypass anti-money laundering reviews that banks have to make when approving mortgages. Shell companies can provide an extraordinary level of secrecy, making it impossible for even the seller to know who they’re making a deal with, the advisory states.
Last summer, a bipartisan group of lawmakers introduced bills in the House and Senate to force US-based shell companies to disclose their owners to the Treasury Department, according to BuzzFeed. The bills are still languishing in Congress.
Special Counsel Mueller signaled last week that money laundering is focus of his investigation. He charged Manafort with laundering an estimated $30 million over the course of several years leading up to his involvement with the Trump presidential campaign.
It remains to be seen whether Trump was involved in similar efforts.
Editor’s Note: This report also appears in sister site Money & Power.