Danish banking holding Danske Bank said that it will shut down its banking operations in the Baltics and in Russia after Estonia ordered it to close the branch at the center of one of the largest-ever money laundering scandals, Reuters reported.
The Estonian Financial Supervision Authority (FSA) has ordered Danske Bank to cease its banking operations in the country due to suspicious transactions linked to its branch in Estonia between 2007 and 2015.
In September 2018, the Danish banking company following an internal investigation concluded that money laundering activities seem to have taken place through its Estonian Branch. The bank in its investigation results said that it identified shortcomings at various levels, including governance and control systems, the non-reporting of suspicious transactions among others.
Danske said that in recent years, it has significantly stepped up anti-money laundering measures.
“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,” said the bank’s interim CEO Jesper Nielsen. “We are sorry to be leaving Estonia against this background, but we understand the severity with which the Estonian FSA looks at this case, and we will close down our remaining activities as requested. We will continue our cooperation with the Estonian and other relevant authorities.”
The Danish bank said that independent of the Estonian FSA notification, it has decided to close down its activities in Estonia, Latvia, Lithuania and Russia as part of its strategy to focus on its Nordic core markets.
The Danske case, which focuses on money moved between 2007 and 2015, has raised questions about supervision of the Danish bank, prompting the EU’s executive European Commission to ask the European Banking Authority (EBA) to investigate.
Danske is dealing with the fallout of the scandal in the form of slipping profits, which fell by more than 25 percent last year.