Security & Fraud

AML Scandal Leads To Danske Exit From Russia, Baltics

Danske Exits Russia, Baltics After AML Scandal

Danske Bank, which was involved in one of the biggest money laundering scandals of all time, will no longer do business in Russia or the neighboring Baltic states, according to a report in Reuters.

The Danish bank made the decision after Estonian officials ordered the bank to close its branch in the country. Danske is being investigated in numerous countries, including Britain, Denmark, the U.S. and Estonia, over more than $226 billion in payments from the Russian region, through the Estonian branch. The money in question was moved between 2007 and 2015.

The bank was ordered to close the Estonian branch on Tuesday (Feb. 19), and was also told that it must pay back deposits from customers in eight months. The bank originally planned to simply scale back its operations in the country, but not close completely.

After Estonia prompted the bank to close, Danske Bank released a statement that it was shuttering its business in Russia, Latvia and Lithuania as well. According to Danske Bank’s yearly annual report, it earned $100 million in income from those four countries. Total staff in those areas numbers around 3,000, but many employees won’t leave because Danske has a large back-office Lithuanian operation.

Kilvar Kessler, the chief of Estonia's banking regulator Finantsinspektsioon, said Denmark was at fault for handling the case poorly. The scandal, he said, “dealt a serious blow” to Estonia’s financial reputation, and his was “the only institution in Estonia or Denmark to react to the activities of Danske Bank.” Kessler added that he wasn’t convinced Danske would stop “such activities,” and that Danish regulators treated the problem with “silk gloves.”

Danske is dealing with the fallout of the scandal in the form of slipping profits, which fell by more than 25 percent last year. The bank claimed it has improved its anti-money laundering actions is going to focus on the Nordics.



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