Danske Bank, the largest bank in Denmark, has pleaded guilty to defrauding US banks in one of the biggest money-laundering scandals of recent years.

The bank, which confessed to one count of conspiracy to commit bank fraud, will pay a $2 billion penalty – made up of around $1.2 billion in criminal forfeiture to the US, $672 million to Danish authorities and a civil penalty of around $178 million to the US Securities and Exchange Commission.

In comments to the FT, Kenneth Polite, assistant attorney-general for the DoJ’s criminal division, said that the fine represents the largest forfeiture imposed by the US Department of Justice on a financial institution compared to its market capitalisation.

Court documents cited by the DoJ showed that Danke’s Estonian business attracted foreign customers between 2008-16 by allowing them to transfer large sums of money “with little, if any, oversight,” and that it specifically facilitated access to the US financial system to “high-risk customers,” including some from Russia.

The DoJ said that this branch alone processed $160 billion through US institutions on behalf of these customers, and that it conspired with many to mask the nature of their transactions sometimes via shell companies.

It added that the bank was aware of the potentially criminal behaviour by at least February 2014, and that it lied to US banks about the Estonian branch’s anti-money laundering programme.

Danske has agreed to assist the DoJ with ongoing probes and will link executive pay directly to compliance.

Danske was also charged this week by the SEC with fraud for misleading investors on anti-money laundering compliance shortcomings in Estonia.

Martin Blessing, the chair of Danske Bank said: “We offer our unreserved apology and take full responsibility for the unacceptable failures and misconduct of the past, which have no place at Danske Bank today.”

Deputy Attorney General Lisa O. Monaco, said: “Today’s guilty plea by Danske Bank and two-billion-dollar penalty demonstrate that the Department of Justice will fiercely guard the integrity of the US financial system from tainted foreign money – Russian or otherwise.

“Whether you are a U.S. or foreign bank, if you use the U.S. financial system, you must comply with our laws. We expect companies to invest in robust compliance programs – including at newly acquired or far-flung subsidiaries – and to step up and own up to misconduct when it occurs. Failure to do so may well be a one-way ticket to a multi-billion-dollar guilty plea.”

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