Danske Bank has been ordered to close its troubled Estonian branch before the end of 2019. Estonian regulators noted on February 19 that the bank violated anti-money laundering regulations for many years by allowing high-risk money-laundering clients to make suspicious transactions through the bank.
In addition, they stated that Danske Bank misled the Estonian public authorities by providing them with inadequate information and thus actually hampered their investigation, according to a statement from the Estonian Board of Financial Supervision.
Danske Bank announced the same day that it is also closing banks in Latvia and Lithuania and Russia.
In a related move, the European Union Banking Authority has opened a formal investigation “into a possible breach of Union law by the Estonian Financial Services Authority and the Danish Financial Services Authority in connection with money laundering activities linked to Danske Bank and its Estonian branch in particular.”
Here’s a roundup of reaction and reporting:
- IRS Whistleblower Attorney Stephen M. Kohn and Executive Director of the National Whistleblower Center represents Howard Wilkinson, the British trader in Danske Bank’s Estonia office who exposed the scandal. Wilkinson raised concerns over the illegal money-laundering scheme in 2013, a tale described in the Wall Street Journal in October 2018.
“This is a lesson to corporate banks. Danske Bank made a grave error when it forced Mr. Wilkinson to sign a restrictive non-disclosure agreement, instead of working with Mr. Wilkinson in trying to fix the problems,” according to a statement from Kohn.
“All of the banks responsible for this historic money-laundering scandal, not just the Dankse Bank, must be investigated by regulators and held fully accountable,” Kohn added.
- Maíra Martini of Transparency International. “We expect for this investigation to confirm that both financial supervisors have failed to protect the European Union and, by extension, our interconnected world, from dirty money. The European Union will need to identify all at fault in order to learn from this bitter lesson.”
The group notes that while “both Estonia and Denmark received good marks on the Corruption Perceptions Index 2018, Transparency International has highlighted how countries with the cleanest public sectors have been enabling grand corruption around the world. These two countries, in particular, have become easy targets of individuals and companies behind the illicit US $230 billion funneled through Danske Bank.”
- Nienke Palstra of Global Witness on the EU move: “The sheer scale of the money laundering scandal at Danske Bank in Estonia has shaken Europe to its core. Today’s news is a positive step towards rebuilding trust in the EU’s ability to fight corruption, but we must see Danish and Estonian authorities, Danske Bank, and senior bankers held to account to make sure this never happens again.”