Estonia Launches Criminal Probe Against Danske Bank - Report

Tom Burroughes Group Editor 2 August 2018

Estonia Launches Criminal Probe Against Danske Bank - Report

The bank faces fresh woes with news that the Baltic state's authorities are investigating it over money laundering allegations.

Estonia’s general prosecutor has started a criminal investigation of Danske Bank – which has already been warned it needs to bolster its capital – over claims that the Danish bank was involved in money laundering via the Baltic nation, a report said.

Reuters, which carried the report, said Danske Bank declined to comment on details but said the Copenhagen-headquartered bank would if necessary co-operate with Estonian authorities.

The bank has launched its own investigation into claims and will issue findings next month.

Estonia’s Prosecutor General Lavly Perling told parliament this week at an extraordinary meeting to deal with the Danske Bank case that her office had started a criminal investigation into the bank, the news service said.

The investigation is based on a complaint filed last week by Bill Browder of asset manager Hermitage Capital. Browder’s complaint involvess an application to Estonia’s Prosecutor General to conduct an investigation and bring to trial a group of 26 employees of the Estonian branch of Danske Bank.

Browder, a prominent shareholder activist who has locked horns with Russian authorities in the past, has fought to expose corruption and money laundering. He reportedly said in a recent interview that Estonia had become a conduit for laundered funds. He has also filed a criminal complaint against Danske Bank in Denmark.

In May, Denmark’s financial regulator told Danske Bank it needs to bolster its capital by DKK5 billion ($803 million), and imposed eight orders and eight reprimands on the lender. Estonia’s financial watchdog in February said it would open an investigation into the lender after media reports claimed it had been aware of money laundering allegations at its Estonian business as far back as 2013.

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Campaign group Transparency International, which seeks to expose issues around bribery, corruption and illicit financial flows, said Estonia and Denmark must take a hard line on such cases.

"Eighteen years ago, when Denmark joined the OECD Anti-Bribery Convention, it pledged to not be influenced by considerations of national economic interest in enforcement against foreign bribery. Estonia pledged the same back in 2004. Danish and Estonian authorities have to show they endorse the same approach in fighting financial crime and money laundering," Maíra Martini, writing on the TI blog, said.

The article said: "Last year, a series of investigations across Europe led by the Organized Crime and Corruption Reporting Project (OCCRP) uncovered the Azerbaijani Laundromat - a network of illicit financial payments that used reputable banks and secret companies to funnel payments from a US$2.9 billion slush fund to buy political influence and launder Azerbaijan’s international image. In this scheme, most of the funds were deposited into bank accounts that four UK-registered shell companies held in the Estonian branch of Danske Bank, Denmark’s largest bank. Danske Bank Estonia was also at the centre of a previous OCCRP investigation known as the Russian Laundromat. And before that, when Danske’s Estonian branch still went by the name Sampo Bank, it was reportedly implicated in the case of fraud and corruption in Russia uncovered by the late Sergei Magnitsky."

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