Outgoing Minister of Justice Lea Danilson-Järg says she has reason to remain optimistic that Estonia will get a good cut out of US$2 billion in damages due from a recent court ruling in the United States, in respect of the Danske Bank money laundering case.
While negotiations are ongoing, one of the last acts of the XIV Riigikogu was to pass amendments to the Penal Code which would make money laundering crimes on anything like the scale of that seen with Danske, dating back to the period 2007-2015, subject to far more stringent penalties in Estonia, than was the case before.
That the case was heard in the U.S. at all in part relates to there having been little point in hearing it in Estonia, prior to the Penal Code amendments, the minister says.
The case will also help to improve Estonia's image internationally as a safe place to do business, the minister added.
Minister Danilson-Järg said: "These negotiations have lasted several months thus far, but they are moving in a positive direction, plus there is reason for optimism that the U.S. authorities will share the sum awarded from Danske, with Estonia:"
"We also need the consent of the U.S. foreign ministry (ie. the State Department-ed.) is also necessary, so it will take some time to complete the process," the Danilson-Järg added, via a Ministry of Justice press release.
As a whole, the talks represent a sign of exceptionally strong cooperation with the U.S., talks which must definitely continue, the minister added. "Through the course of international judicial cooperation, Estonian prosecutors have contributed to violations prosecutions over several years, so that Danske Bank could be prosecuted for money laundering both in Denmark and in the U.S."
"We undoubtedly want to continue this good cooperation with the U.S. in relation to serious crime in the future as well," the minister went on.
The negotiations have been held between the Estonian prosecutor's office and U.S. colleagues on the issue of sharing the sum arising from the money laundering sentence, since the decision was made known.
Last December, Danske Bank entered a plea bargain with the U.S. Department of Justice and the Securities and Exchange Commission on money laundering issues, agreeing to pay a total of nearly US$2 billion in fines.
Recently adopted amendments to the Penal Code will enable Estonia itself to respond effectively to cases similar to Danske in duture.
When the issues first came to light, however, since penalties in other states were significantly harsher than those available in Estonia, it was not wise at that point to press charges against Danske, in Estonia.
"However, the situation [in Estonia] has changed now," the minister added.
The last working week of the XIV Riigikogu saw amendments to the Penal Code submitted by the Ministry of Justice adopted, which allow significantly higher penalties to be imposed for money laundering violations similar to those Danske has been sentenced for
This includes the total financial penalty to be up to €40 million, or even higher when determined based on revenue, the minister added.
"In addition, the changes also allow the statute of limitations for misdemeanors, which has also been a serious obstacle in conducting proceedings, to be extended from three to five years," Lea Danilson-Järg added.
This all serves as a better deterrent, she said, and supports fair competition, strengthens Estonian business and economy, and has a positive effect on the country's image.
Over €200 billion in potentially illicit funds were thought to have passed through Danske's Tallinn branch in the years 2007-2015.
The branch was closed in 2019, while the case crossed into the money flows of two other major banks active in Estonia, SEB and Swedbank, albeit to a lesser extent.
Head of Danske Bank at its headquarters in Copenhagen, Thomas Borgen, resigned, when the scale of the money laundering activities which had gone on at the now-defunct Tallinn branch, became clear.
In 2020, then-finance minister Martin Helme (EKRE) signed a deal with law firm Freeh, Sporkin & Sullivan, whose leading partner, Louis Freeh, was a former FBI chief, in an effort to get a successful result for Estonia in money laundering cases heard in the U.S.
Partly due to allegations that Freeh had also acted in the Prevezon money laundering case, which involved a pro-Kremlin businessman in money flows that went through Danske in Tallinn itself, this deal was controversial, and was ultimately scrapped.
Editor: Andrew Whyte