The Biggest Money Laundering Scandals of the Last 10 Years
Learn about the scams that became history—and how to make sure you’re not in the way when history inevitably repeats itself.
From the Danske Bank debacle to the Panama Papers exposé, the consequences of inadequate fraud protection extend far beyond monetary losses, including massive fines and irreparable damage to brands. Needless to say, proactive vigilance against financial crime is not just recommended, but essential for survival in the business world.
In this series, we explore several money laundering scandals and the tools necessary for businesses to safeguard their assets and preserve their reputations in an unforgiving landscape.
- Danske Bank
Danske Bank, one of the largest banks in Denmark, became embroiled in a massive money laundering scandal involving its Estonian branch. It was discovered that billions of dollars, mainly from Russia and former Soviet states, were laundered through the bank between 2007 and 2015. The scandal highlighted significant deficiencies in Danske Bank’s anti-money laundering controls.
As a result, the bank agreed to pay two billion dollars to US regulators and over $400 million to Estonian authorities.
Suggested read: The Largest AML Fines in the World—2023 Update
- 1MDB scandal
The 1Malaysia Development Berhad (1MDB) scandal involved the misappropriation of billions of dollars from a Malaysian government fund. It was alleged that high-ranking officials, including former Prime Minister Najib Razak, used the fund for personal gain and to finance lavish lifestyles. The scandal involved complex financial transactions and money laundering schemes across multiple countries.
According to leaked financial documents, 1MDB was reportedly a center of fraudulent activity from its inception. Enormous amounts were purportedly obtained through government bonds and redirected into bank accounts located in Switzerland, Singapore, and the US. Prior to the 2013 general election, approximately $731 million surfaced in Najib’s personal bank account, purportedly utilized to settle political debts, cover his credit card expenses, and finance extravagant expenditures for his spouse. Najib refuses these accusations and insists that the funds were gifted to him by a Saudi prince.
Suggested read: 6 Key Steps to a Successful Anti-Money Laundering (AML) Program in 2024
- Wirecard
In 2020, German payments company Wirecard declared insolvency following the revelation of a €1.9 billion ($2.1 billion) deficit in its accounts. Markus Braun, its former CEO, faced trial in December, charged with complicity in what has been labeled as the largest fraud scandal in German history. Prosecutors allege that Braun knowingly approved inaccurate financial reports and that Wirecard falsified documents to depict funds it never actually had. Braun denied any involvement in the fraud.
- Standard Chartered Bank
Standard Chartered Bank faced allegations of processing transactions totaling $438 million between 2009 and 2014, with the majority involving accounts linked to Iran through its Dubai branch, routing payments via its New York office or other US-based banks. In response to these accusations, US and UK authorities mandated that Standard Chartered pay $1.1 billion to settle charges of inadequate money-laundering safeguards and violations of sanctions, particularly against Iran. Additionally, the bank was fined £102 million ($129 m) by the Financial Conduct Authority for deficiencies in its anti-money-laundering protocols, notably in counter-terrorism finance controls across the Middle East. This penalty stands as the second-largest ever levied by the UK regulator for failures in anti-money-laundering compliance.
Suggested read: Effective Sanctions Screening: Best Practices for Preventing Financial Crime
- Panama papers
The Panama Papers leak in 2016 exposed how wealthy individuals and entities worldwide used offshore accounts and shell companies to evade taxes, launder money, and conceal assets. The leak involved millions of documents from a Panamanian law firm, Mossack Fonseca, revealing the financial dealings of politicians, celebrities, and business leaders.
The key results and outcomes of the scandal were:
- Exposure of global corruption. The leak of millions of documents from the Panamanian law firm Mossack Fonseca revealed the hidden wealth and financial dealings of prominent politicians, celebrities, business leaders, and other high-profile individuals worldwide. It shed light on the widespread use of offshore accounts and shell companies for tax evasion, money laundering, and other illicit purposes.
- Resignations. Several world leaders and government officials implicated in the Panama Papers scandal faced public backlash and political repercussions. For example, the Prime Minister of Iceland, Sigmundur Davíð Gunnlaugsson, resigned amid protests after his offshore investments were revealed. Other officials in countries such as Pakistan and Ukraine also faced scrutiny and pressure to step down.
- Legal investigations and reforms. The Panama Papers prompted law enforcement agencies and regulatory authorities in numerous countries to launch investigations into individuals and entities mentioned in the leaked documents. These investigations led to legal action, prosecutions, and in some cases, convictions for tax evasion, money laundering, and other financial crimes. Additionally, the scandal prompted calls for reforms to enhance transparency and crack down on offshore tax evasion and financial secrecy.
- Increased scrutiny of offshore financial services. The Panama Papers scandal led to heightened scrutiny of offshore financial services providers and tax havens. Governments and international organizations pushed for greater transparency and cooperation in combating tax evasion and money laundering, leading to reforms in banking regulations and increased efforts to combat financial crime.
Suggested read: Money Laundering Reporting Officer: Roles and Responsibilities
How businesses can ensure they don’t become part of the history of the biggest financial scandals
The scandals we discussed underscore the necessity of robust sanctions screening and transaction monitoring solutions for all AML-obliged businesses.
Money laundering can often occur even when a company’s employees and management are unaware of it. It’s now a myth that only financial businesses are susceptible to money laundering, as criminals exploit various industries—from sports to art—to launder illicit funds. Ultimately, it’s the company that faces significant fines and reputational damage. Therefore, it’s crucial to establish reliable anti-money laundering (AML) and fraud detection mechanisms throughout the entire user journey, such as:
- User Verification, including Liveness Detection
- Business Verification
- AML Screening, including adverse media screening and global watchlist screening
- Transaction Monitoring, including ongoing screening of customer transactions for signs of fraud and money laundering
- Fraud Prevention, a set of measures which enables identifying malicious user activity throughout the whole user journey, including detection of fraud networks.
By implementing robust internal controls, leveraging advanced technological solutions, and fostering a culture of compliance, businesses can fortify their defenses against fraud and money laundering.
