The European Banking Authority (EBA) has opened an investigation into a breach of Union law by the Estonian Financial Services Authority and the Danish Financial Services Authority.
This alleged breach is in connection with money laundering activities linked to Danske Bank and its Estonian branch.
Investigations were begun after a letter from the European Commission called the EBA to use its powers and examine if there were failures by the Estonian or Danish authorities to comply with Union Law.
Prior to the investigation commencing, the EBA held preliminary inquiries with both of the authorities.
An investigation is being opened under Article 17 of the EBA founding regulation, and if a failure is found, the EBA may make recommendations on how to comply with the regulation.
The European Commission stated in its letter that questions are raised at the extent of the Estonian AML studies of Danske Bank’s Estonian branch.
The letter from the European Commission said, “Questions remain however on the extent and depth of such inspections and whether sanctions were applied in an appropriate way. We have come to the conclusion that further analysis is required. The need for effective supervision and the need to apply effective, proportionate and dissuasive sanctions is a requirement that stems directly from Union legal framework.
“It seems that the Estonian AML supervisor notified their Danish counterparts of the exposure of Danske Bank’s branch to non-resident deposits. The actions of the Danish supervisor, as the one responsible for the compliance with group-wide AML/CFT policies and procedures remain unclear and raise questions as to whether the Danish supervisor carried out effective supervision of the Danske Bank group.”
In addition to this, the Commission quizzed whether the information being exchanged between the Estonian and Danish supervisors was relevant or adequate.
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Copyright © 2018 RegTech Analyst
