PM backs financial regulator, says no place for money laundering in Estonia

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Prime Minister Jüri Ratas (Centre).
Prime Minister Jüri Ratas (Centre). Source: Priit Mürk/ERR

Prime Minister Jüri Ratas (Centre) backed up the Estonian Financial Supervisory Authority (FSA) decision to order Danske bank to cease trading in Estonia, adding that money laundering had no place in Estonia, and that such activities did not fit with the country's values.

Speaking at the government's regular Thursday press conference, Mr Ratas said that: ''This demonstrates that, sooner or later, these types of money laundering activities will come out. We have the capability and the knowledge to bring make these things public, and this illustrates that one should not come to Estonia with such ideas,"

"I am glad that the share of non-residents has fallen sharply, as has the share of offshores, which indicates that Estonia has dealt very seriously with this issue," he added.

A large part of the €200 billion in potentially illicit funds which passed through Danske Estonia during 2007-2015 is thought to have been via accounts held by non-residents.

Praises FSA, police

The prime minister said he supports and commends the work of the FSA, the Central Criminal Police and the prosecutor's office, in cleaning up the financial system. Mr Ratas said that as a result, money laundering risks at banks have declined significantly as of today.

"We are mainly talking about the period 2007-2015, and compared with that time, the situation today is definitely more secure and there are fewer risks," he said.

"The FSA decision is also connected with ensuring the security and credibility of the Estonian financial sector, and existing Danske customers definitely do not need to worry about their deposits and loans; the branch closure is to take place gradually and on terms that protect the interests of the Estonian clients," he continued.

"With any kind of new suspicions, I definitely trust these competent authorities in Estonia; their activity so far has affirmed that they are capable of checking the suspicions and, if needed, respond powerfully," he added.

Swedbank under suspicion too

Mr Ratas added it is now important to ensure that Estonia's economic environment remains transparent and honest.

According to the Swedish public broadcaster SVT, extensive and systematic money laundering is also suspected to have taken place at Swedbank, during approximately the same period, and connected with the Baltic units of Danske Bank.

Investigative SVT program Uppdrag Granskning said that at least 40 billion Swedish kronor (around €3.8 billion) moved between Swedbank and the Baltic units of Danske Bank.

Among some 50 customers are shell corporations and corporate which had no business activities as such, but nonetheless made transfers amounting to millions, the program stated.

Sweden's own financial regulator has said it considers the claims made on the SVT Uppdrag Granskning broadcast as very serious, and has promised to cooperate with its Baltic counterparts.

"The information from SVT confirms that there is a risk that Swedish banks are being used for money laundering, primarily in the banks that have operations in the Baltics. These disclosures are important, even if the scope of the suspected transactions in Swedbank appears to be much smaller so far in comparison to Danske Bank," the Swedish watchdog said on Thursday.

Denmark's financial regulator had long been cooperating with its Estonian counterpart regarding Danske. This has not been without its issues, however. A second letter to the Danish authority from the Estonian one, for instance, where the latter announced it was conducting a second round of on-the-spot investigations at Danske and asked for Danish feedback on the matter, was reportedly not responded to.

The Estonian prosecutor's office is also investigating Swedbank.

The FSA board issued a precept to Danske Bank prohibiting the branch of the bank from operating in Estonia and requiring its activities cease within eight months, noting the importance of coordinating this with the interests of the current account holders.

Keeping an eye on Danske

The bank has been ordered return all customer deposits in full. At the same time, it may not use the precept as a pretext to force current borrowers to terminate their loan agreements or repay their loans to the bank early.

Additionally, Danske must present an action plan for closing its branch in Estonia to the financial watchdog within 20 days of the precept's issuing. Failure to comply with the rules could mean a penalty of €100,000 per fault, per day, and the FSA says it will continue to monitor the situation closely, issuing new resolutions where needed.

Investigations into the activities spread much further than Estonia. Danske is also under investigation in its home country of Denmark, as well as France, Germany, the UK and the US.

Investigations into Deutsche Bank by German authorities have not revealed any wrong-doing in connection with the Danske case.

Editor: Andrew Whyte

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