Danish and Estonian regulators under EBA investigation over Danske incident
The European Banking Authority (EBA) has opened a formal investigation into a possible breach of Union law in connection with money laundering activities linked to Danske Bank and its Estonian branch in particular.
The investigation alleges that the breach may have been caused by the Estonian Financial Services Authority (Finantsinspektsioon) and the Danish Financial Services Authority (Finanstilsynet), the regulators in the country in charge of supervising the bank and each of its geographical arms.
This was followed by the closure of all Estonian operations by the bank, ordered by the Estonian regulator itself.
“We acknowledge that the serious case of possible money laundering in Estonia has had a negative impact on Estonian society, and we acknowledge that the Estonian FSA, against this background, finds it best that Danske Bank discontinues its Estonian banking activities,” says Jesper Nielsen, interim CEO of Danske Bank.
Independently from the Estonian regulator’s request, Danske also has closed Estonia, Latvia and Lithuania, as well as the activities in Russia.
Nielsen comments: “In recent years, we have pursued a strategy of focusing on our Nordic core markets and have also reduced our Baltic activities in connection with this. The decision to close down our activities completely in the Baltics and in Russia is fully in keeping with this strategy.”
This launch of this investigation follows a letter from the European Commission. This letter calls on the EBA to use its powers to examine whether there may have been a failure by the Estonian and Danish competent authorities to comply with their obligations under Union law.
Before formally opening the investigation, the EBA says it conducted preliminary inquiries with both authorities.
This matter has a long history. As reported in 2017, Nordea and Danske were being investigated for anti-money laundering (AML) violations.
In terms of recent events, in December 2018 Estonian police arrested ten former Danske employees over the €200 million money laundering case.
In November 2018, the value of Deutsche Bank shares plummeted after confirmation it was involved in the case. Shortly after, Deutsche Bank’s head office and other premises in Germany were raided by the police.
There have been a number of other twists and turns – such as in October 2018 when Danske received requests for information from the US Department of Justice (DoJ) in connection with the case.
While back in September 2018, Thomas F. Borgen, CEO of Danske Bank, stepped down in relation to the issue.