On February 19, 2019, Estonian Financial Supervision Authority (the Estonian FSA) gave Danske Bank 20 days to submit an action plan to close its local branch within eight months. In December, Estonian authorities detained 10 former Danske Bank employees on suspicion they had facilitated money laundering through non-resident clients, including many Russians.
This week the European Banking Authority announced it was opening a formal investigation into a possible violation of EU laws by the FSA and its Danish counterpart Finanstilsynet over the case.
On February 19, 2019, Danske Bank announced that, following the investigation of suspicious transactions in Estonia during the period of 2007 to 2015, the Estonian FSA has ordered Danske Bank to cease banking operations in Estonia, which Danske Bank has agreed to do.
Danske Bank also announced it is closing operations in Latvia, Lithuania, and Russia.
Danske Bank’s press release announced that, independently of the Estonian FSA’s notification, Danske Bank has decided to close all its activities in the Baltics and Russia.
In the future Danske Bank will serve only subsidiaries of Danske Bank’s Nordic customers and global companies with a significant Nordic footprint. It has transferred all other banking activities to its non-core unit to be wound up or divested.
The decision by the Estonian FSA to order the Danske Bank branch to close and the decision of Danske Bank to also close its operations in Latvia, Lithuania and Russia, along with the pending criminal investigations of Danske Bank in France, the United Kingdom and the United States, the investigation of the European Banking Authority, and the detention of 10 former Danske Bank employees in Estonia, illustrate the financial and reputational loss that accompanies inadequate attention to financial regulatory matters, especially relating to transnational corruption and money laundering. In the onslaught of investigations Danske Bank is struggling to survive. In this context its trimming of its operations is essential to its survival.