Danish bank holding company Danske Bank said that it will shut down its banking operations in the Baltics and in Russia owing to multiple factors.
Image: Danske Bank to cease operations in Estonia, Latvia, Lithuania and Russia. Photo: courtesy of Danske Bank A/S.
The Estonian Financial Supervision Authority (the Estonian 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.
The bank said that in recent years, it has significantly stepped up anti-money laundering measures.
Danske Bank interim CEO Jesper Nielsen said: “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.
“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.
In another development, the European Banking Authority (EBA) has launched a formal investigation into a potential violation of Union law by the Estonian Financial Services Authority (Finantsinspektsioon) and the Danish Financial Services Authority (Finanstilsynet) regarding the money laundering activities linked to Danske Bank and especially its Estonian branch.
The investigation was launched in response to a letter from the European Commission which asks the EBA to probe into the actions of the Estonian and Danish regulators in complying with their obligations under Union law.