Estonia orders Danish bank to close unit over alleged fraud
HELSINKI (AP) — Estonian authorities said Tuesday that the local branch of Danske Bank must close after the financial group admitted that massive amounts of money from Russia and former Soviet states had been laundered through the subsidiary.
The Estonian Financial Supervisory Authority said the activities of Denmark’s largest financial institution must cease in Estonia within eight months.
“A strong signal has been sent to the entire world: there is no place for money laundering in Estonia,” the country’s Prime Minister Juri Ratas told The Associated Press during a visit to Helsinki.
Danske Bank said it will comply with the request, shutting its banking activities in all three Baltic countries and in Russia.
The Copenhagen-based bank admitted in September that some 200 billion euros ($226 billion) had flown through accounts at its Estonian branch from 2007 to 2015, following reports of transfers, including from family members of Russian President Vladimir Putin.
Kilvar Kessler, the financial authority’s chairman, said that the scandal has dealt “a serious blow” to the transparency, credibility and reputation of the financial market of this small Baltic country of 1.3 million.
“The lesson ... is that we need more international co-operation, more concrete regulations and capabilities for analysis,” said Ratas, who is currently campaigning for re-election in a March 3 general election. “It’s been a difficult case for Estonia.”
Estonian authorities demanded that Danske Bank present an action plan within 20 days.
“We acknowledge that the serious case of possible money laundering in Estonia has had a negative impact on Estonian society,” said Jesper Nielsen, Danske Bank’s interim chief executive.
Danske Bank said activities in Latvia, Lithuania and Russia also would be shut down. However, Danske Bank’s shared services center in Lithuania will continue operations.
Danske Bank has some 15,000 clients with deposits and loans at its unit in Estonia but has already stopped providing services to private individuals and local businesses in Estonia.
Last year, 10 former employees at Danske Bank’s Estonia branch were detained in connection with the scandal.
They were mainly Danske Bank client managers suspected of knowingly assisting large-scale money laundering that involves Azerbaijan and Georgia, two former Soviet republics.
Jan M. Olsen in Copenhagen, Denmark, contributed to this report.