Security & Fraud

EU Probe: Danske Ignored Russia’s Money Laundering Warnings

Danske Ignored Russian Money Laundering Warnings

Danske Bank ignored warnings from Russia’s Central Bank about money laundering and suspicious transactions worth billions through Danske’s Estonian branch, Reuters reported.

The warnings were sent in 2007 and 2013, and the information stems from the outcome of an investigation by the European Banking Authority (EBA). The resulting document shows the extent of bank supervisors’ failures to catch the money laundering or stop it from happening.

Danske Bank admitted that 200 billion euros went through its Estonian branch between 2007 and 2015, and the document shows that Russian Central Bank employees warned about money laundering risks and tax evasion schemes. The document illustrates how little action was taken to respond to the warnings, a move that the EBA says is a breach of EU rules.

Earlier in the month, EU’s national banking supervisors, who oversee the EBA, did not agree with the proposal on the breach of rules and blocked any further action against Danish and Estonian regulators.

Sven Giegold, an EU lawmaker, said that legal actions against Denmark and Estonia should be initiated. EU Justice Commissioner Vera Jourova expressed a similar sentiment: “The case of Danske Bank is not closed for us, regardless of the decision of EBA,” she said.

According to the document, Danske Bank was warned by the Russian bank after it acquired Finland’s Sampo Bank and its Estonian business in February 2007. In June of that year, the Russian Central Bank wrote a letter saying that “clients of Sampo Bank permanently participate in financial transactions of doubtful origin” that were worth billions of rubles, on a monthly basis.

The letter also said Sampo’s clients lived in offshore jurisdictions like the British Virgin Islands, and they were receiving transfers from shell companies in Russia that had no actual exchange of goods and services.

The EBA document shows that neither Danish nor Estonian authorities did anything about the Russian warnings.

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