Security & Fraud

Danske Bank Ordered To Shut Down Estonian Branch

Danske Bank Ordered To Shut Down Estonian Branch

Danske Bank was ordered by Estonia to shutter its local branch at the center of a money-laundering scandal, and has been given only a few months to do so.

According to a report in Reuters, the financial regulator in Estonia caught the world off-guard with the move, demanding that Danske Bank close the branch and pay back customers within eight months. That contrasts with the bank’s plan to scale back operations in the country but still maintain a presence in Estonia. Danske Bank had been aiming to serve its Nordic customers, including in Estonia, noted the report.

If the bank doesn’t comply with the ruling, it could face a fine of as much as 10 percent of its turnover.

“We have every right to put an end, once and for all, to this … as … large-scale violations of the local rules have been committed … and this has dealt a serious blow to the … reputation of the Estonian financial market,” said Kilvar Kessler, head of Estonia’s banking regulator Finantsinspektsioon, reported Reuters. The regulator went on to say that his office was the only institution in Estonia or Denmark that reacted to what occurred at Danske Bank, which he said has resulted in rising tensions between the two countries.

The ruling was made public after Estonian and Danish regulators learned that the European Union’s banking regulator is looking into Danske Bank to see if there was a breach of any EU laws related to money laundering. That investigation is expected to last two months. If the bank is found to have breached EU rules, the European Banking Authority (EBA) could make recommendations to the local regulators in Denmark and Estonia.

The money laundering scandal is focused on money that moved through the Estonian branch between 2007 and 2015, with little oversight or questions on the part of Danske Bank.


New PYMNTS Report: Preventing Financial Crimes Playbook – July 2020 

Call it the great tug-of-war. Fraudsters are teaming up to form elaborate rings that work in sync to launch account takeovers. Chris Tremont, EVP at Radius Bank, tells PYMNTS that financial institutions (FIs) can beat such highly organized fraudsters at their own game. In the July 2020 Preventing Financial Crimes Playbook, Tremont lays out how.