Monday, April 19, 2021

EU banking watchdog clears Estonian, Danish regulators over Danske Bank

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National banking supervisors who control the European Union banking watchdog effectively forced it to clear financial regulators in Estonia and Denmark, who were investigated in relation to suspected money laundering activities by Danske Bank, a member of the European Parliament said on Wednesday.

The European Banking Authority (EBA) said in a statement on Wednesday it was closing its investigation.

“At a vote at its meeting on 16 April 2019 the EBA’s Board of Supervisors rejected a proposal for a breach of Union law recommendation,” it added.

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The rejection blocked any further legal action by the EBA against the Estonian and Danish supervisors and signaled EU states’ reluctance to let the bloc’s authorities investigate the exposure of their banking systems to financial crime.

Danish and Estonian financial regulators have publicly blamed each other for the Danske Bank money laundering scandal, after Denmark’s largest bank last year admitted that 200 billion euros ($226 billion) of suspicious transactions flowed through its Estonian branch between 2007 and 2015.

The EBA in February opened a formal investigation into a possible breach of EU law by the two regulators over the Danske case, which is considered by many of Europe’s largest money-laundering scandal.

All 28 national supervisors but one who sits on the watchdog’s board rejected the EBA’s recommendation, German MEP Sven Giegold told Reuters after talking to a person familiar with how the decision was taken.

The EBA declined to elaborate on the decision of the board.

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The Danish and Estonian financial regulators were not immediately available for comment.

Giegold, who sits in the EU parliament’s committee on financial crime, called the decision “scandalous” and urged the EU Commission to continue the inquiry into a possible breach of EU laws by the Danish and Estonian authorities.

“We cannot accept the biggest money-laundering scandal in Europe not being properly investigated,” he said.

EU states have halted a reform of the powers of EU financial supervisors which was intended to make it more difficult for states to block EU probes into a national supervisor. A watered-down overhaul was definitively adopted on Tuesday.

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