Is it money laundering or not? EU can’t decide on Danske case

Did local regulators in Estonia and Denmark fail to flag the Danske Bank’s money laundering scheme? Seems EU regulators can’t decide whether it was clearly money laundering or not.

EU bank regulators looked into it and said yes. But their superiors, the European Banking Authority (EBA) board of supervisors, felt the failings did not amount to a breach of EU law. The European Commission, which requested the review, disagrees and plans to pursue the EU investigation into Danske Bank’s scandal.

All this inspired a Bloomberg columnist to write:

Money launderers and financial criminals should — in theory — have good reason to fear the European Union’s army of white-collar cops. The bloc boasts 28 national financial regulators, a euro-zone banking regulator in Frankfurt (the Single Supervisory Mechanism), an EU-wide banking supervisor in London (the European Banking Authority), and a financial markets watchdog in Paris (the European Securities and Markets Authority). It’s a blizzard of three- and four-letter acronyms. 

Whistleblower Howard Wilkinson exposed the Danske bank scandal. He reported suspicious activity at bank’s Estonia branch, where he worked until 2014. Since then, investigators have identified up to $20 billion in fraudulent financial activity. National Whistleblower chair Stephen M. Kohn is Wilkinson’s whistleblower lawyer.

An internal report from the European Banking Authority found that the regulators in Denmark and Estonia failed “to live up to their obligations in upholding EU money laundering laws,” according to Bloomberg news. After EBA declined to act on the report, the European Commission announced that it would to investigate Danske Bank. The Financial Times reports:

The European Commission was incensed by the European Banking Authority’s decision this month to reject its own draft report showing failings in how Danish and Estonian authorities supervised Danske. The Danish bank’s operations in Estonia were at the centre of revelations last year of flows of dirty money into Europe.

Vera Jourova, the EU’s justice commissioner, told the Financial Times that “the case of Danske Bank is not closed for us, regardless of the decision of EBA”. “It is important that lessons are drawn and that supervision at national level is effective and fully in line with EU law,” she said. “I will make sure that this case will not be swept under the carpet.”