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Summary of the Document: Enforcement of the Anti-Money Laundering and Capital Requirement Directives in Denmark and Estonia

Core Content

This document is a formal inquiry from several Members of the European Parliament (MEPs) to the European Banking Authority (EBA), concerning alleged violations of the EU Anti-Money Laundering Directive (AMLD) by the Danish and Estonian authorities in relation to the Danske Bank scandal. The inquiry is based on reports from the Danish newspaper Berlingske and the journalism investigation organisation OCCRP, which revealed significant money laundering activities through the Estonian branch of Danske Bank.

Main Allegations

The document highlights several serious concerns regarding the enforcement of AMLD provisions in Denmark and Estonia:

• Money Laundering through Estonian Branch: In March 2017, Berlingske and OCCRP reported that millions of Euros were laundered through the Estonian branch of Danske Bank, with the bank failing to verify the beneficial ownership of its clients or conduct proper customer due diligence as required by international and European anti-money laundering rules.

• Early Warnings Ignored: Danish authorities were allegedly alerted as early as 2013 to suspicions of money laundering. Similarly, Danske Bank's management in Estonia and Denmark received strong warnings in 2014, including from the bank's internal auditor, who noted that staff at the Estonian branch were actively hiding clients with suspicious activities from regulatory authorities.

• Delayed Investigations: Despite the early warnings, the Danish financial regulator and the Financial Intelligence Unit (FIU) initiated their investigations only later, which may have hindered timely action to prevent or mitigate the laundering activities.

• Conflict of Interest: The Head of the Danish financial regulator, Mr Henrik Ramlau-Hansen, was a member of Danske Bank's executive board during the time of the alleged breaches, raising concerns about a potential conflict of interest and the integrity of the regulatory process.

Key Provisions of AMLD in Question

The MEPs request the EBA to investigate whether the following key provisions of the AMLD were correctly implemented and enforced:

• Article 13§1 and §4: These provisions require Member States to mandate enhanced due diligence measures for Politically Exposed Persons (PEPs), including verifying the source of wealth and funds, and applying such measures on a risk-sensitive basis.

• Article 13§6: This article obliges Member States to ensure that institutions pay special attention to money laundering or terrorist financing risks associated with products or transactions that may promote anonymity, and to take preventive measures where necessary.

• Article 34§1: This provision requires Member States to ensure that institutions establish adequate policies and procedures for customer due diligence, reporting, record keeping, internal control, risk assessment, risk management, compliance management, and communication to prevent money laundering and terrorist financing.

• Article 37§1: This article mandates that Member States ensure competent authorities effectively monitor and take necessary measures to ensure compliance with the third AMLD by all institutions and persons covered.

• Article 39: This provision outlines the requirement for effective, proportionate, and dissuasive sanctions against entities that fail to comply with AMLD obligations.

Call to Action

The MEPs urge the EBA to:

• Open a preliminary inquiry into the Danske Bank case to assess the extent of the alleged violations.

• Initiate a formal Breach of Union Law Investigation against the Danish and Estonian authorities if the findings indicate non-compliance with AMLD requirements.

• Request the European Commission to examine whether the Danish and Estonian financial regulators have fulfilled their supervisory duties under the Capital Requirement Directive (CRD), particularly in ensuring Danske Bank's compliance with relevant financial regulations in both countries.

Conclusion

The document underscores the need for a thorough and independent review of the enforcement of AMLD in Denmark and Estonia, particularly in light of the Danske Bank scandal. It raises concerns about delayed regulatory action, potential conflicts of interest, and the possible non-implementation of key AMLD provisions, urging the EBA and the European Commission to take appropriate measures to address these issues and ensure compliance with EU anti-money laundering obligations.