How Europe’s Banks Wound Up Laundering Russia’s Money

The chaotic transition to capitalism in Russia and its neighbors triggered a flood of hundreds of billions of dollars out of the former Soviet Union. Torrents of cash were often routed through offshore zones with limited controls, making it difficult to tell the difference between legitimate business and illicit flows from criminal activity. Sometimes the suspect money made its way into prominent international banks. The money-laundering scandals now rocking Europe’s lenders shine a light on the whack-a-mole quality of enforcement efforts.

A picture is forming of mostly Nordic banks that, often via their Baltic units, became hubs for Russian criminals who channeled funds to the West. In the case of Danske Bank A/S, Denmark’s biggest lender, suspicious funds were funneled through its branch in Tallinn, Estonia, from 2007 to 2015. Allegations also emerged against Swedbank AB, Sweden’s oldest bank. On March 27, Swedish broadcaster SVT reported that the bank misled U.S. investigators about suspicious customers and transactions, and that Paul Manafort, President Donald Trump’s former campaign manager, was among those who received questionable payments. Helsinki-based Nordea Bank Abp also allegedly handled dirty money.