Companies from Russia and other parts of the former Soviet Union have apparently turned the small country of Estonia into a massive money laundering haven. An investigation into the Estonian branch of Denmark’s largest bank is examining up to $150 billion which may have been involved.
From $3.9 Billion to $150 Billion
Investigators at Danske Bank (CPH: DANSKE), the largest bank in Denmark, are reportedly combing through a whopping $150 billion worth of transactions that passed through its Estonian branch between 2007 and 2015. While its likely not all of the suspicious funds are from an illegal source, this is a jump by an order of magnitude from the bank’s initially suspected figure said to be involved with money laundering by Russian and other Eastern European companies.
Last year Danish media sources reported the suspected laundered funds at $3.9 billion but in early July the figure jumped to between $8 and $9 billion. And earlier this month, FT reported that up to $30 billion may be suspect. The bank’s stock price has taken a considerable hit from the revelations.
“Any conclusions should be drawn on the basis of verified facts and not fragmented pieces of information taken out of context,” Danske Bank chairman Ole Andersen told the Wall Street Journal which brought up the $150 billion figure. “As we have previously communicated, it is clear that the issues related to the portfolio were bigger than we had previously anticipated.”
According to Estonian law, an individual may face up to ten years in jail for taking part in an organized money laundering crime. However, a company guilty of money laundering faces a maximum penalty of just 16 million euros.
Back in July, the bank’s Board announced it intends to waive all income from suspicious transactions in Estonia and use it “to the benefit of society,” like supporting efforts to combat financial crime. “It is still too early to draw any conclusions regarding the extent of the issues, as the comprehensive investigations into the matter are still ongoing. However, it is clear that we did not live up to our own standards or the expectations of society at large when it came to preventing our Estonian branch from being used for potentially illegal activities at the time when these transactions took place. This is something we deeply regret and which we should not benefit from financially in any way. Therefore we will not keep the income from these suspicious transactions,” CEO Thomas F. Borgen, said at the time.
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