Biggest Money Laundering Cases of All Time

It is estimated that the amount of ill-gotten gains laundered each year compromises 2-5% of the global GDP, which amounts to trillions of pounds. These dirty funds have been acquired by criminal activity ranging all the way from street level crimes al the way through to kleptocrats and dictators stealing funds and wealth from their own country.

Annually there are millions of separate money laundering schemes that almost always seek to end with untraceable funds stored in one of the advanced, politically and economically stable western economies.

Unsurprisingly, the United States of America is the number one target for dirty money but what may be is that the UK is the second; with up to £90 billion expected to be laundered through our economy this year.

Whether these illicit funds originated in the UK from domestic crime or come from abroad, each money laundering scheme that seeks to exploit the UK economy will likely cross borders and banking systems several times as they seek to hide the source of the funds. Making money laundering a truly global affair.

But not all schemes are born equal and with such vast amounts of illegal wealth needing to be cleaned some money laundering schemes are truly huge both in scale and value. With the funds passing through some of the most recognisable names on finance and banking, whether wittingly or unwittingly.

Below we will look at some of the largest money laundering schemes ever uncovered.

Wachovia Bank Money Laundering Scandal (2010)

Wachovia Bank was a major US bank which has since been acquired by Wells Fargo (who are not accused of any involvement in this scandal). In 2010 Wachovia was fined $160 million for having laundered more than $380 billion on behalf of various Mexican drug cartels over the course of years.

The cartels would smuggle the cash earned through their criminal endeavors in the US back into Mexico where there was significantly lower regulatory standards around AML. They would then deposit the cash into the Mexican banking system and transfer the funds into Wachovia accounts in the US.

Wachovia was also found to have physically moved large amounts of currency for the cartels via its bulk currency transport service.

Wachovia was found to have not carried out appropriate AML procedures, including confirming the origin of funds, which US Federal Prosecutor Jeffrey Sloman said ‘gave international cocaine cartels a virtual carte blanche to finance their operations.’

Charges were never brought against any individuals for this scandal.

The HSBC Money Laundering Scandal (2012)

In 2012 HSBC was fined a record $1.9 billion by US regulators, along with $665 million in civil penalties for having been found to have laundered money for some of the world’s most infamous drugs cartels and countries under sanction by the USA.

This was found to have been a result of weakened AML controls as well as by as deliberately circumventing US sanctions when dealing with Iran, with the bank going as far as to remove any reference to the country to hide the transactions.

In the wake of the International Financial Crisis, HSBC had undergone a series of sweeping structural changes aimed at reducing costs that had further weakened what were already inadequate AML processes and defences.

Whilst many other banks were punished for similar offences at this time HSBC’s are largely considered the worst. They were found to have laundered over $880 million for cartels such as the famous Sinola Cartel as well as sanctioned countries like Iran and Syria.

Commentators and prosecutors blamed a corporate culture that placed profits before ethics for allowing this to happen but also criticized the responsible regulatory bodies such as the US Office of the Comptroller of the Currency; as both the bank and regulatory body were aware of AML deficiencies for years.

Dankse Bank Money Laundering Scandal (2018)

One of the most infamous and shocking money laundering scandals of all time and one of the largest ever uncovered the Danske Bank Money Laundering Scandal occurred when €800 billion of suspicious transactions from countries such as Russia, Latvia, and Estonia via an Estonian branch of the Copenhagen based bank between 2007 – 2015.

The Tallin based branch had been acquired by Danske Bank in 2007 as part of merger with Finnish Sampo Bank. The management of the Estonian branch was found to have been highly corrupt but a lack of oversight and communication from Danske Bank leadership that would likely have spotted the issue has also been blamed. An example of which is that the branch still used its own IT systems after the merger and Danske head office is thought to have not had the correct facilities in place to interpret the branch’s paperwork, which was mainly in Estonian or Russian.

Having said this, the branch had faced accusations for years and several whistleblowers had come forward warning of serious corruption. Such as in 2013 when a whistleblower warned the bank was knowingly dealing with family members of Putin and also the FSB.

In 2013, JP Morgan went as far as to halt all services to the branch as they suspected its involvement in money laundering. Most other major international banks followed suit in 2015.

In the fallout the bank’s shared price halved, its CEO Thomas Borgan resigned, and he was charged by the Danish government alongside two others. All charges were dropped in 2021 but Denmark has since massively increased penalties for money laundering to become some of the toughest in Europe. A Russian-Danish woman and Lithuanian man have been jailed for nine and seven years respectively for their parts in the plot.

US authorities have fined the bank $2 billion and further may be forthcoming from other countries.

Westpac Bank Reporting Scandal (2020)

One of the main Australian banks, Westpac, was found to have not adequately reported on over 19 million foreign transactions. Whilst it is not known what the exact value of illicit fund laundered through Westpac is some transactions have been directly linked to cases of child exploitation and numerous high risk overseas banks.

The Australian Transaction Reports and Analysis Centre (Austrac) said "The failure to pass on information... undermines the integrity of Australia's financial system and hinders Austrac's ability to track down the origins of financial transactions, when required to support police investigations.’

Westpac’s Chairman and its Chief Executive both resigned and the bank was fined a record A$1.3 billion.

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