#Danske - European Banking Authority opens investigation into Estonia and Danish anti-money laundering supervisors

The European Banking Authority (EBA) have opened a formal investigation into a possible breach of Union law by the Estonian Financial Services Authority (Finantsinspektsioon) and the Danish Financial Services Authority (Finanstilsynet) in connection with money laundering activities linked to Danske Bank and its Estonian branch in particular.

The commencement of an investigation follows a letter from the European Commission calling on the EBA to use its powers to examine whether there may have been a failure by the Estonian and Danish competent authorities to comply with their obligations under Union law. Before formally opening the investigation, the EBA conducted preliminary inquiries with both authorities.

The investigation has been opened under Article 17 of the EBA's founding Regulation.  Where an investigation results in a finding of breach of Union law, Article 17 provides that the EBA may address a recommendation to the competent authority concerned setting out the action necessary to comply with Union law.

Estonian Authority Chairman Kilvar Kessler said: “Finantsinspektsioon has given the European Banking Authority a thorough presentation of our supervisory work for several years at Danske Bank and we are ready to keep working together in full transparency in future. We are sure that the EBA will treat the supervisors equally and that the same thorough process will be conducted vis-à-vis other similar cases that are currently known about and other financial supervisors of those countries that have discovered such cases.”

The management board of Finantsinspektsioon issued a precept to Danske Bank today (9 February) prohibiting the branch of the bank from operating in Estonia. The bank must cease its activities in Estonia within eight months. Kessler was critical of the Danish regulator, saying that Finantsinspektsioon was the only institution in Estonia or Denmark to react to the activities of Danske Bank: “We have every right to put an end once and for all to this very exceptional and unfortunate case, as serious and large-scale violations of the local rules have been committed in Estonia through the branch of a foreign bank, and this has dealt a serious blow to the transparency, credibility and reputation of the Estonian financial market, while the supervisory authority of the home country has handled the bank softly.”

The Danish FSA, say that the supervision of Danske Bank's foreign branches and subsidiaries is carried out by the host countries’ supervisory authorities and that it does not understand Finantsinspektsioon's view that responsibilities are supposedly different in other countries.

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