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German prosecutors drop probe into Deutsche Bank ties to Estonian dirty money scandal 

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German prosecutors have abandoned their criminal investigation into staff at Deutsche Bank suspected of helping launder dirty money from Russia and neighboring countries through the tiny Estonian branch of Denmark’s largest lender, Danske Bank.

A year after carrying out raids on Deutsche Bank offices, Frankfurt-based prosecutors said this week that there was insufficient evidence to pursue charges against individuals at Deutsche Bank. Instead, they imposed a fine of $15.8 million on the German bank for its failure, on more than 600 occasions, to promptly submit reports that would have alerted criminal investigators to suspicious bank transactions.

The fine is equivalent to just 0.06% of the $26.4 billion total net revenues Deutsche Bank generated in 2019.

The penalty marks the second regulatory action against Deutsche Bank over its controversial relationship with the now notorious Estonian branch of Denmark’s Danske Bank. The first fine was imposed by New York regulators in July.

More substantive fines may be yet to come as the U.S. Department of Justice continues to investigate Deutsche Bank. It too is reportedly interested in the German bank’s decision to process tens of billions of dollars in suspect payments for shell-company clients of Danske Estonia over many years.

Two years ago, a report by Danish law firm Bruun & Hjejle, commissioned by Danske Bank, found that the bank’s Estonian branch had been at the center of Europe’s largest ever money laundering scandal. The bank washed $230 billion in likely dirty money into and out of accounts that were controlled, through anonymous shell companies, by thousands of secretive figures in Russian and other former Soviet republics and satellite states.

Of that sum, suspicious payments in U.S.dollars totaling more than $150 billion were processed through New York by the U.S. arm of Deutsche Bank, according to American regulators.

As a result, New York’s Superintendent of Financial Services Linda Lacewell in July imposed a fine on Deutsche Bank of $150 million, though this penalty covered two other, unrelated violations too.

“Deutsche Bank failed to take appropriate action to prevent Danske Estonia from transferring billions of dollars of suspicious transactions through Deutsche Bank accounts in New York,” Lacewell said.

The closure of the German criminal investigation into bank staff comes in spite of detailed revelations about Deutsche Bank’s relationship with Danske Estonia in the FinCEN Files, a global investigation by the International Consortium of Investigative Journalists and 109 media partners.

The FinCEN Files is a cache of classified documents largely made up of more than 2,100 suspicious activity reports, secretly sent by banks to a unit of the U.S. Treasury Department called the Financial Crimes Enforcement Network, or FinCEN. Obtained by BuzzFeed News, and shared with ICIJ and media partners, the FinCEN Files detail suspect money flows of more than $2 trillion between 1999 and 2017.

The FinCEN Files documents show that, for many years, Deutsche Bank secretly had suspicions about the transactions it processed in the U.S. on behalf of anonymous shell-company clients of Danske Estonia.

In February 2019, as regulatory scrutiny of Danske Estonia increased, Deutsche Bank had quietly sent more than one million suspicious activity reports to the German regulator, flagging concerns about past transactions involving Danske Estonia clients which it belatedly judged to be of potential interest to the police.

Later in 2019, Frankfurt prosecutors carried out a raid on Deutsche Bank’s offices looking for evidence that the German bank’s staff had colluded in the laundering of dirty money for the clients of Danske Estonia.

Welcoming this news that this investigation has now been dropped, Stefan Simon, a member of Deutsche Bank’s management board, said in a statement, “It is clear that there was no evidence of criminal misconduct either on the part of Deutsche Bank or its employees.”

Meanwhile, in Estonia, investigations into former staff at Dankse Bank continue. Two years ago, prosecutors named nine former Danske Bank staff as suspects in a criminal investigation into money laundering at the bank. Since then, two additional former staffers were named and prosecutors said their inquiries had widened to ten specific crimes which they believe generated more than $2 billion in dirty money that was washed through Danske Estonia.

Despite dropping their criminal investigation, German prosecutors confirmed that, between 2007 and 2015, Deutsche Bank had played a central role in processing suspicious payments into and out of accounts at Danske Bank’s Estonian branch held in the name of thousands of anonymous shell companies, often registered in the United Kingdom.

The ultimate owners of these shell companies were based in Russia and other former Soviet republics and satellite states, the prosecutors said, echoing the findings of U.S. regulators.

An ICIJ analysis found 3,267 anonymous U.K. shell companies in the FinCEN documents, each linked to one or more suspicious transactions. Of these, most held accounts at Danske Estonia or another bank in the Baltic region.

ICIJ found that some of these shell companies filed false financial statements at Companies House, the U.K. company registry. Others were registered to residential addresses where the occupant denied knowledge of them. Others were set up and run by straw men and women with no knowledge of the companies’ true activities or owners.

In response to FinCEN Files findings, Mel Stride, a U.K. member of parliament and chair of the influential Treasury Select Committee, has written to government ministers and regulatory agencies asking why so many U.K. companies feature in the suspicious activity reports obtained by journalists and why the U.K. is viewed as “higher risk” for money laundering by the U.S. Treasury Department.

In the United States, FinCEN Files revelations prompted Linda Lacewell, the New York regulator who fined Deutsche Bank in July, to write an outspoken op-ed article detailing how, in her view, money laundering had to “metastasize” inside the banking system and wrap itself “within the guts of financial institutions.”

“Banks say they did not actually know the money was criminally derived, yet they have been permitting massive transactions to run through shell companies to money laundering havens, with no apparent business purpose, notifying the [FinCEN] and taking their cut in fees,” she wrote.

“Individual bankers are rarely held accountable, so money laundering becomes a source of profits and bank fines become a cost of doing business. When the profits exceed the fines, the business choice is easily corrupted.”

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Election Integrity

Analyzing the Case for Election Fraud

Despite the overwhelming pressure, if you can’t help but feel that tingling sense of knowing that is telling you there’s more to the story, you are not alone. In fact, according to a new Rassmussen poll, nearly 50% of voters believe the election had issues. A quick look at the data blatantly shows that indeed, shenanigans abound (how can a state have 1+ million more mail-in ballots tallied than they sent out?). But was it fraud or masterful gamesmanship?

Adryenn Ashley

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The world, or at least the global media, has spoken: Biden won the 2020 Election.

UPDATED FREQUENTLY WITH NEW INFORMATION – Last update 12/21/2020

A quick Google search reveals pages upon pages of reports of why the Trump team’s assertions of vote fraud and election fraud and vote flipping are flat out fallacies. YouTube has announced a ban on any videos questioning the election results. And now on Monday all 538 electors have voted, formalizing Biden’s 306-232 win. And while there is still Congress to get through, and the inauguration, based on social media and television news and practically every other point of information bombarding society today, Biden is now the President-elect.

But why now, after Government officials confirmed during Senate testimony that a foreign adversary, Russia, attempted to interfere in the 2016 United States Presidential Election via “a multi-faceted approach intended to undermine confidence in our democratic process.” According to U.S. intelligence official reports, Russia targeted voter registration databases in at least 21 states and sought to infiltrate the networks of voting equipment vendors, political parties, and at least one local election board. And if their purpose was not so much to “hack” the election but create chaos and sow seeds of uncertainty around our election process, I would say they have won. But what if this cycle, it was Russia who somehow manipulated extra ballots and placed the blame on the Democrats? What if…?

Russian Experience With Voter Fraud

The 2004 presidential election in Ukraine saw suspiciously high turnout rates that “even Stalinist North Korea would envy,” the State Department declared!

Back then, the U.S. government decried as corrupt an earlier election where special voting boxes were created to help citizens vote from home, election observers were expelled from vote counts, pre-election polls were wildly off, and voter turnout in certain communities exceeded 90%.

But the story of that Ukrainian election as recounted by then-Ambassador John Tefft to a Senate committee in December 2004 raises a tantalizing question for voters distrustful of the Nov. 3 elections results in our own 2020 Presidential Election: If tactics and outcomes in the Ukrainian election back then were enough to cry foul, why can’t Americans debate similar concerns here?

Tefft’s testimony raises an important question: Should America, the greatest democracy in the world, share any of the fraudulent attributes of a Ukrainian election? The answer for most Americans is hopefully resounding “No.”

And despite continued and repeated headlines that there was no fraud, according to the Harvard Kenney School report on Election Integrity this cycle, expert assessments indicate that compared with 2016, the performance of this contest displays several warning flags, namely worsening confidence in the integrity of American elections and falling public trust, challenges to legitimacy arising from threats of campaign violence,legal disputes about the process and results, and public protests about the outcome, as well as growing attempts at voter suppression. 

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Investigations

Advocates celebrate major US anti-money laundering victory

Landmark laws to thwart the use of U.S. shell companies by terrorists, human traffickers, arms dealers and kleptocrats are set to be enacted after more than a decade of lobbying and politicking with rare bipartisan support.

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Advocates celebrate major US anti-money laundering victory

The sweeping anti-money laundering reforms hitched a lift in the annual defense spending bill that passed the Senate 84-13 today, and was approved by the House 355-78 earlier this week.

The Corporate Transparency Act requires U.S. companies to report their true owners to the Treasury Department’s Financial Crimes Enforcement Network, known as FinCEN — largely ending anonymous shell companies in the country.

The International Consortium of Investigative Journalists has repeatedly documented how the rich, the powerful and the criminal have used anonymous entities to hide their wealth, including in the 2016 Panama Papers and the 2020 FinCEN Files investigations.

Welcoming the clampdown, Transparency International’s U.S. director Gary Kalman said, “It is rare for such a simple measure to promise such an enormous impact.” Kalman added that the long sought anti-corruption reforms would “move us into a new era of enforcement.”

The new legislation will allow law enforcement agencies and financial institutions to request company ownership information from FinCEN. The data will not be publicly available.

FinCEN Files was based on a trove of suspicious activity reports filed by banks and other financial institutions to FinCEN. BuzzFeed News obtained the secret documents and shared them with ICIJ and more than 100 other media organizations.

The global investigation exposed how a broken U.S.-led enforcement system allows banks to continue to profit from moving dirty money tied to drug cartels, trafficking rings fueling the opioid crisis, fraud, organized crime, sanctions evasion, ruinous real estate schemes, and terrorism.

“Too many times, people … think money laundering is a federal, victimless crime. It is certainly not that,” Sen. Sherrod Brown of Ohio, the top Democrat on the Senate banking committee, told reporters on a call organized by the advocacy group the FACT Coalition. “Sinaloa cartel actors, fentanyl traffickers have been destroying thousands of families in my state and across the country.”

Earlier this year, Brown credited FinCEN Files for revealing the lack of forceful enforcement against banks that repeatedly violate the law. Advocates said a number of proposed bipartisan bills, including one co-sponsored by Brown, were instrumental in generating the support needed to attach the reforms to the spending bill.

“This is a really big deal to get this passed,” Brown said Thursday. “No more hiding these abuses in anonymous shell companies. It also cracks down on bank officials who look the other way or actively aid money laundering.”

A long time coming

ICIJ has shown how offshore shell companies have been used for dubious financial dealings and tax avoidance through a series of global exposés, including the Secrecy for Sale investigation, Panama Papers and Paradise Papers. U.S. lawmakers have repeatedly cited the investigations in proposing reforms over the years.

Countries like the United Kingdom, Indonesia and members of the European Union also took steps toward ending anonymous shell companies in response to ICIJ reporting.

“When the Panama Papers leaked, there was a huge flurry of interest because there’s all of a sudden this recognition that it was kleptocrats, money launderers, corrupt officials the world over, as well as criminals, were all using a very common structure to help evade law enforcement, which was setting up an anonymous company,” Lakshmi Kumar, policy director of Global Financial Integrity, said.

The phenomenon is not limited to the exotic offshore tax havens of popular imagination. U.S. jurisdictions like Delaware, Wyoming and Nevada are among the world’s top locations to set up anonymous companies. Legislation to require corporations to disclose their true owners was first proposed in the U.S. over a decade ago, co-sponsored by then-senator Barack Obama, and similar bills have been introduced over the years.

Advocates credit years of lobbying a broad coalition of stakeholders, including the U.S. Chamber of Commerce which had previously been a leading opponent, in getting the reforms across the finish line this year.

“What’s changed now is a growing understanding among various constituencies about the harms that anonymous companies pose, and the threats that they pose for our financial system, to our businesses,” Clark Gascoigne, senior policy advisor at FACT Coalition, said.

But it’s not a done deal quite yet.

Although the anti-money laundering proposals have had the support of the administration, President Donald Trump has repeatedly threatened to veto the National Defense Authorization Act over provisions unrelated to financial secrecy.

Both the House and the Senate votes surpassed the two-thirds margin that would be needed to override a veto, although some Republicans have indicated that they would not support what would be the first veto override of the Trump presidency.

But the NDAA has been reliably passed by Congress every year for six decades and advocates are confident that the time has come for the landmark financial transparency measure that’s included in the omnibus bill.

“It’s one of the few areas where the outgoing Trump administration agrees with the incoming Biden administration,” Gascoigne said. “It may be the first bill in the history of Congress that has the support of both Dow Chemical and Friends of the Earth. Heck, the state of Delaware even supports reform.”

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Investigations

Muslim Brotherhood suspect and Saudi billionaire linked to same offshore companies, Austrian report says

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One of 30 people in Austria suspected to be members of the Islamic fundamentalist group Muslim Brotherhood was the director of offshore companies linked to a Saudi billionaire, according to an investigation by Austrian media outlets profil and Ö1.

The man, described as a 37-year-old Viennese entrepreneur with Iraqi roots, is suspected of “participating in a terrorist, subversive and criminal organization” and was a target of the police investigation into the group and the Palestinian extremist organization Hamas, the report said

The inquiry, which led 930 officers to raid 60 apartments, shops and clubs in four federal states last month, had no connection to the Vienna terror attack that killed four and injured 23 on November 2, according to officials cited by Deutsche Welle.

The Austrian report ー based on police records ー does not name the suspect, nor the Saudi businessman, for fear of hampering the ongoing probe into possible terror financing.

The pair’s link to shell companies in the British Virgin Islands and other offshore financial centers was revealed for the first time after the reporters’ examination of Paradise Papers, a trove of leaked documents obtained by Süddeutsche Zeitung and shared with the International Consortium of Investigative Journalists in 2017.

The 13.4 million files include incorporation documents, emails, contracts and other records from two offshore service providers and the company registries of some of the world’s most secretive countries.

The Austrian man was listed as the director of several companies in the BVI, Malta and the Bahamas, the media report said. His address on the documents referred to an apartment in Vienna that belongs to the wife of one of the main suspects in the police investigation, according to a review of Austria’s land registry records.

By cross-checking the confidential files with property records, the reporters also found that the shell companies owned properties in the U.K., including two office buildings, a commercial property and a retail park, worth about $73 million in total.

The documents show that a Liechtenstein trust owned by the Saudi businessman was behind those companies. The man is also known as a philanthropist who has financed Islamic studies at various European universities in recent years, including in Austria, the report added.

The complex offshore structure identified by the journalists is legal, the report said, but “can be used to disguise the flow of money and the identity of the true economic beneficiaries.”

Profil and Ö1, two ICIJ media partners in Austria, asked the Viennese suspect about the purpose of the offshore company network and his link with the Saudi billionaire. A lawyer representing him declined to comment.

The post Muslim Brotherhood suspect and Saudi billionaire linked to same offshore companies, Austrian report says appeared first on ICIJ.

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