Danske Bank’s Estonian branch could have handled up to $30bn (€26bn) of non-resident money, mostly from Russia and other former Soviet republics, in 2013, a new report probing the dealings of the branch alleged on September 3, according to the Financial Times.
The report by Promontory Financial, a consultancy, was commissioned by the bank itself, as it is trying to establish the extent to which its small Estonian branch handled money flows from the east and how much of the handling happened under the radar of the bank’s monitoring.
“NRP [non-resident portfolio] transaction volume peaked in 2013 with the number of transactions approaching 80,000 that year, and the transaction volume approaching $30bn,” the report concluded, the Financial Times reported.
“It’s a truly breathtaking amount for such a small branch. You can’t have that amount flowing through without it raising questions,” the UK newspaper quoted a person with knowledge of the investigation, which covers the years 2007 through 2015.
It remains unclear how much of the $30bn worth of flows was in fact money-laundering operations.
Interest in Danske Bank’s Estonian branch and its handling of non-resident money began in February when the first reports on likely money laundering at the branch appeared in the Danish and UK media. Subsequent reports hinted that the scale of illegal operations was larger than originally suspected.
Danske Bank has so far escaped serious repercussions for failing to monitor money flows at its Estonian branch, but the reports of the past couple of months pile up pressure on the lender. It is also facing criminal investigations in Denmark and Estonia.
The revealed scale of money laundering and the sheer amount of non-resident money going through Danske Bank also casts a spotlight on unmonitored money flows from Russia and other countries of the former Soviet Union into the EU.
So far, Eurozone member Latvia has borne the brunt of the allegations because of its boutique banks industry that specialised in non-resident deposits.
With Danske Bank’s Estonian branch appearing involved on an enormous scale, Tallinn can also expect scrutiny from the Eurozone authorities.
The European Central Bank, which is coming under fire for overlooking problems in the Baltic states, keeps saying it does not have adequate control powers and has called upon member states to better cooperate on tracking down suspicious transactions.
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