Danske thrown out of Estonia after nation drawn into laundering probe

Bloomberg

It’s not every day that a bank gets thrown out of a country. But, Estonia took the extraordinary step of telling Danske Bank A/S to get out. Within two hours, Danske did the country’s financial watchdog one better: the harassed Danish lender annou- nced a retreat from the entire Baltic region as well as Russia. It’s the latest dramatic twist in a $230 billion money laundering scandal that erupted last year.
The case has not only shocked Europe but also led to acrimonious finger pointing between the supervisory authorities in Estonia and Denmark over who should have done what, and when, in their oversight of Danske. The European Banking Authority said this week it has launched a formal investigation into both supervisors.
The US Justice Department is among those to have started criminal investigations into Dan- ske, after it admitted in September that much of dirty money that flowed through its tiny Estonian operations should probably be treated as suspicious in origin. The bank also faces a separate class-action lawsuit from investors, and is facing fines potentially in the billions of dollars.
“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 Danske’s interim chief executive officer, Jesper Nielsen.
Danske shut down the Estonian non-resident accounts at the heart of the scandal in 2016. Last year it said it would limit its services there to the subsidiaries of its Nordic and international corporate clients. Kilvar Kessler, head of the Estonian Financial Supervisory Authority, said his country wants Danske out completely because of the “serious and large-scale violations of the local rules.”