‘The Contract Factory’: Inside Danske Bank Estonia’s Money Laundering Machine
Maxim.Canning, Skype user, was a one-stop shop for anyone looking to launder illegal funds.
He will not only sell you an offshore company, but also help disguise the true owner. He could create fake contracts to give the money legality or quickly funnel it through dozens offshore accounts.
“Maxim” could even find you proxy directors to add to company paperwork — for a price.
“We have for 1000 euros per piece a Kazakh until 2022,” he wrote to one client in 2014, after the documents they had provided for a different director didn’t check out.
Estonian investigators say Maxim’s real name was Jevgeni Agnevštšikov, and he was one of 19 people on Danske Bank Estonia’s foreign banking team who they believe laundered more than US$1.6 billion of illicit funds for their clients.
The money allegedly came from eight schemes in Russia, Azerbaijan and the U.S., Iran. Switzerland and Georgia. A scam that defrauded Facebook by nearly $100 million was also involved. It flowed through Danske Bank Estonia accounts between 2007 and 2015, when the bank was at the center of one of Europe’s largest ever money laundering scandals.
Investigators presented a 160-page report detailing the allegations against the 19 bankers to them late last year. The document, obtained by Estonia’s Eesti Ekspress and shared with OCCRP and Danish newspaper Berlingske, outlines the charges that prosecutors expect to file in the coming months, before the case goes to court. However, only 15 people will face charges as two of the accused were disqualified and two others provided evidence.
Investigators allege Agnevštšikov’s bosses, Juri Kidjajev and Erik Lidmets, started selling off-the-books services in 2005, when they worked for the Estonian branch of Sampo Bank. They continued recruiting trusted bankers to join their team two years after Danske Bank bought Sampo.
Several of the bankers who left Danske Bank’s foreign banking division in 2015 moved to Estonian lenders. Investigators claim that some continued to launder money for as long as four years.
Lidmets declined comment, and Kidjajev was not reachable by reporters. Andres Simson, a lawyer for Agnevštšikov and another of the accused bankers, declined to comment while the case is ongoing, saying only: “I can confirm that my defendants deny any guilt.”
Philippe Vollot was the chief administrative officer at Danske Bank. He said that the bank was cooperating fully with authorities. “Combating financial crime and money laundering is a key priority for Danske Bank. Overall, we are now in a different position with respect to combating financial crime and money laundering than when the situation developed in Estonia,” he said.
Maria Entsik, state prosecutor, declined comment to discuss the contents of the report. She stated that it should not be revealed before trial. She stated that the police would soon provide the complete case file to the prosecutors to allow them to decide whether to proceed with it.
“To date, a total amounting to 10 million euros in assets of suspects and third parties enriched by the proceeds of crime have been seized to secure the confiscation requirements of the state,” she added.
‘Long Live Photoshop’
Conversations cited in the investigative document show how the bankers helped their clients to avoid running afoul of Danske Bank’s anti-money laundering controls.
In one Skype chat, banker Mikhail Murnikov advised user thunderball1111 on how to fill in the details of a proxy director to ensure it would be accepted by the bank’s Moscow offices, including adding fake seals and signatures. “Long live Photoshop,” he joked.
In another conversation from September 2014, Murnikov contacted someone going by the Skype name Richard-zorge77 with what he described as a “mega-proposal.”
“If the contracts go so difficult for you and not very beautifully. We offer an additional service. We can sign and stamp contracts for every bank. Other documents. The price list is 1500 euros per company.”
It is not clear from the investigators’ report if Richard-zorge77 accepted the “mega-proposal,” but the following April, Murnikov sent him another message.
Investigators caught Murnikov, along with Jekaterina Pankratova (another banker), discussing creating fictitious beneficiaries for businesses in June 2015. This was in connection to a major money laundering case that took place in Switzerland.
Reporters reached out to Murnikov for comment but he declined to respond. Pankratova was not reachable.
The bankers were prolific. Based on data from Lidmet’s computer, investigators found the group had created more than 1,122 offshore companies between 2006 and 2010 and made millions of euros in fees and commissions.
The money was split in several ways according to documents seize. A tenth went towards the bankers who used Kidjajev and Lidmets as cover. Each would charge between 50 and 150 euros depending on the service, and the rest to the banker who signed the deal.
Sometimes, bankers would charge a percentage of funds that they allow to pass through Danske Bank account. Sometimes they offered clients a “transit service,” allowing them to transfer money to accounts that belonged to offshore companies that the bankers secretly controlled.
Investigators claim that the system was so efficient that many of the bankers continued using it even after Danske Bank Estonia’s foreign banking division closed. They then took clients with them to other Estonian banks, or switched to working with Latvian institutions. Some of them allegedly continued to launder money despite being questioned by investigators in Dec 2018.
Fakes, Frauds and Facebook
Although the bankers didn’t seem to care about where the money they allegedly laundered was coming from, investigators found at least eight criminal schemes that provided them with funds to clean up.
The Magnitsky case, a massive Russian tax fraud scheme that allegedly cost close to $150 million, is where they are accused of laundering it. It was named after Sergey Magnitsky who worked as an asset manager in the United States and was inadvertently involved with the fraud. Magnitsky discovered the fraud and reported it to Russian authorities. He was then taken to jail and died from maltreatment.
The Azerbaijani Laundromat was the largest source of illicit funds. It is a massive money laundering operation and slush-fund that funneled $2.9 million out of the authoritarian government between 2012 and 2014. Later, OCCRP, Berlingske, as well as other international media, revealed the operation.
Investigators claim that $1.4 billion was stolen from the Laundromat and channeled into 56 Danske Bank Estonia bank accounts. The bankers helped conceal the origins of the money by creating hundreds of fake deals and channeling it to other bank accounts. Investigators said 322 bank accounts were created for “the account managers’ money laundering business.”
Other cash was allegedly taken from what the Estonian authorities described as a scheme to defraud an international social media company based out of California. Reporters confirmed this referred to a 2015 phishing scam against Facebook run by Lithuanian Evaldas Rimašauskas, who stole some $98 million using fake contracts from partner company Quanto.
Estonian investigators discovered that 10% of the money was transferred to Danske Bank Estonia accounts. The majority of the money was then moved to Latvia. One of the suspect bankers approved the transfers and assured compliance officers that they were legal.
Rimašauskas was convicted of the scam by a court in New York in 2019 and sentenced to five years behind bars.
More recently, members of the group of 20 bankers also allegedly helped to disguise the origin of illicit payments organized by Pascal Collard, a former employee of oil giant Gunvor who was convicted of bribing the leaders of Congo and the Côte d’Ivoire to win lucrative contracts in 2018.
The investigators’ report said a payment of 180,000 euros associated with the scheme was transferred by a Swiss citizen to accounts at Danske Bank Estonia. Compliance officers asked about the reason for the transaction and were informed that it was to buy a Bentley luxury car.
In 2019, Swiss prosecutors fined Gunvor $95 million for failing to stop the bribery.
Other funds handled by the Danske Bank Estonia bankers, investigators allege, were the profits made from smuggling illegal cigarettes in the U.S., financial crimes in Iran, and a fake tourism marketing project that was used to steal $1.7 million from Georgia’s government.
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