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Estonia Expels Danish Bank Accused of Money Laundering

Estonia’s financial watchdog has ordered Danske Bank to close its operations in the country as allegations mount over a giant money laundering operation. 21 February 2019

Danske Bank, Denmark’s biggest, will also shutter its operations in Latvia, Lithuania, The Moscow Times reported on 19 February.

 

In September the bank said its small Tallinn operation had processed as much as $230 billion in suspicious-looking transactions. The funds are alleged to have originated in Russia and other former Soviet countries.

 

The European Banking Authority is investigating whether financial authorities in Estonia and Denmark did enough to prevent the money laundering. Danske said in September that its Estonian operation handled the possibly tainted transactions between 2007 and 2015.

 

The scandal has undercut Estonia’s reputation for low levels of corruption.

 

Lithuania meanwhile is forging ahead with plans to make the country a European hub for high-tech financial operations or “fintech.”

 

When UK-based Revolut started looking for a new home in the event of a hard Brexit, Lithuania was an obvious candidate.

 

Lithuania “started its campaign to attract fintech companies in early 2016 and has made considerable progress in creating a proper environment for the development of the fintech industry,” professors of finance Gerda Zigiene and Arturo Bris write in The Conversation.

 

The four-year-old digital bank Revolut was granted an EU-wide banking license by Lithuanian authorities in December, but has been forced to deny claims of Kremlin links made by the chairman of the Lithuanian parliament's budget and finance committee, Stasys Jakeliunas, Business Insider writes.

 

Jakeliunas alleged that DST Global Fund, a Revolut shareholder, was owned by Russians. In an open letter, Revolut’s co-founder and CEO, Nikolay Storonsky, said one of the fund’s six partners, Yuri Milner, was born in Russia but there was no other Russian link.

 

Storonsky was born in Russia but has a British passport and has lived in the UK since the age of 20. His father is a director at a division of Russian energy giant Gazprom. Revolut has said this was irrelevant to its operations, according to Zigiene and Bris.

 

 

  • Danske Bank has been given eight months to return deposits to Estonian customers and sell or transfer its loans to another lender.

 

  • Danske Bank is under criminal investigations in the United States and other countries, The Moscow Times says. U.S. authorities have initiated several high-profile money laundering probes in the Baltics.

 

  • J.P. Morgan, Bank of America, and Deutsche Bank “all made dollar transfers on behalf” of Danske Bank Estonia’s non-resident customers, although there was no indication they were aware the transfers might have been suspicious, Forbes wrote in September.
Compiled by Ky Krauthamer
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