TALLINN/COPENHAGEN (Reuters) - Estonia's financial regulator said on Tuesday it would open an investigation into Danske Bank DANSKE.CO after media reported it had been aware of money-laundering allegations at its Estonian branch as far back as 2013.
Estonia’s Financial Supervisory Authority (FSA) said it would look at whether Danske, Denmark’s biggest bank, knowingly withheld information from the regulator during a series of inspections it conducted at its Estonian branch in 2014.
“We will immediately start a new investigation and we will be asking for the information that was not provided to us earlier,” Livia Vosman, head of communications at the FSA, told Reuters.
In an emailed statement, Danske’s head of compliance, Anders Meinert Jørgensen, said the bank had held constructive talks with Estonian authorities.
“We have launched a thorough investigation to get to the bottom of the events at that time in our Estonian branch. We cannot comment on the matter further, until the investigation has finalised,” he said.
The Estonian investigation follows a report in the Danish newspaper Berlingske and Britain’s Guardian on Tuesday, as well as other international media outlets, that said a whistleblower had alerted the bank in December 2013 about money laundering linked to Russia through its Estonian branch.
The reports allege that those activities involved UK-registered companies that had accounts with Danske in Estonia. They said the whistleblower told Danske’s management that one of the companies, Lantana Trade LLP, was making suspicious payments and appeared to be linked to Russian personalities.
Lantana was dissolved in 2015. Danske Chief Executive Thomas Borgen said in an emailed statement that he could not comment on specific customers, “but the entire portfolio in question (non-residents) has been closed down.”
Kremlin spokesman Dmitry Peskov did not immediately respond to a request for comment.
The FSA said its 2014 inspections at Danske’s Estonian branch had uncovered “large-scale, long-term and systematic violations of anti-money laundering standards.”
It said, however, that the bank at the time had not revealed the existence of an internal review in which questions were raised about who were the beneficial owners behind Lantana.
“The possible misleading of financial supervisors during the monitoring procedure is a serious breach, if Danske Bank itself had additional information about this client that was not submitted at the on-site inspection,” the FSA said.
Shares in Danske Bank fell more than 3 percent on Tuesday. Analyst Mikkel Emil Jensen at Sydbank said the fall was due to “concerns of the consequences this will have for Danske Bank in the future – if there will be fines or loss of customers.”
Danske said in December it had been fined 12.5 million Danish crowns ($2 million) in Denmark for violating anti-money-laundering rules. It also said it was examining whether its Lithuanian and Latvian branches had been involved in money laundering, expanding an investigation beyond its Estonian operations nL8N1OL1N5].
Reporting by David Mardiste and Jacob Gronholt-Pedersen, editing by Larry King
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