This week we take a brief Brexit respite to focus on what could be the biggest money laundering scandal in history.
Between 2007-2015 around €200bn of non-residential flows was passed through Danske Bank’s Estonian branch unchecked. The Danish firm bought Sabro bank in 2007 to expand its Baltic operations but was warned prior to purchase by Russia’s central bank of fraudulent activity which it ignored. Subsequently, the branch wasn’t onboarded onto the groups IT platform in 2008 to save costs which meant the branch didn’t have to adhere to anti-money laundering procedures.
In 2011 The region generated 11% of profits even though it accounted for 0.5% of the bank’s total assets. Many of the Nordic Banks quickly moved to dissociate themselves from the fallout, however, this week Swedbank CEO was fired as investigators honed in on similar claims.
What this story does highlight is a shocking lack of a central European anti-money laundering agency. Leaving it to national regulators and local police will inevitable mean smaller nations like Estonia and Latvia struggle to enforce rules.