Banks, Corruption, Estonia, Financial Services, Legislation
International Internet Magazine. Baltic States news & analytics
Friday, 29.03.2024, 13:19
USD 1.6 b of Russian money laundered through Estonian banks
The three-year effort by the investigative journalism
project OCCRP, which was assisted by Postimees, uncovered that banks in Estonia
were used to move criminal funds from Russia as part of a scheme titled
"Laundromat."
A document leaked to the team investigating the money
laundering scheme lists tens of thousands of companies and reveals how Estonian
accounts of little-known offshore companies were used to move sums that equal a
sixth of country's state budget.
The lion's share, 1.18 bln U.S . dollars, of the funds moved
through Estonia were transferred to the accounts of the Estonian branch of
Danske bank. Information from the money laundering information bureau suggests
sums quickly moved out of Estonia again. The bureau and the financial
supervision authority could do little else but emphasize the need for more
stringent anti-money laundering measures.
Transfers that came primarily from banks in Latvia and
Moldova started in the summer of 2011 and intensified in January 2013.
Transfers ended in the spring of 2014. The financial supervision authority
brought a control action against Danske in 2015 concerning compliance with
measures of anti-money laundering and terrorist financing prevention.
"The bank did not give effect to anti-money laundering
rules, violated client identification requirements, nor monitored the legality
of clients' activities. I dare say violations were extensive and systematic and
took place over a long time," head of the watchdog Kilvar Kessler told Postimees.
A month after the control action, Danske announced its Estonian CEO Aivar Rehe would be leaving. Rehe maintains that his departure has
nothing to do with the money laundering case.
The current chief executive the Estonian operation of Danske, Ivar Pae, said the bank's Estonian branch had insufficient
anti-money laundering measures and monitoring system in the past, including
problems with the "know your client" principle. Pae added that by now
the bank has thoroughly cleansed its portfolios in Estonia and exited the
business of serving non-residents.
"We have changed our organization and management, introduced
more stringent control, trained employees, developed IT systems, and boosted
resources," Pae said.
"Laundromat" was first brought to the attention of
the public by the Russian investigative journalism flagship Novaya Gazeta in
2014, when it was revealed that 20.8 bln U.S. dollars of money of criminal
origin moved out of the country via clandestine bank accounts. Journalists
found out how the money first moved to 112 East European banks and from there
on to countries all over the world. The journalists tracing the funds arrived
at the conclusion that the funds largely ended up in the hands of Russian
businessmen owning construction, engineering, IT and banking businesses who are
closely linked to the authorities of Russia.
The same case has been dealt with for years by investigators
in Moldova, Latvia, the UK and Russia, but attempts to bring the people
responsible for it to justice have failed because of opposition from
Russian officials, Postimees said.