Estonia, Latvia and Lithuania were part of the Soviet Union (USSR) until its collapse in 1991. In its ports tied to Russian submarines; their forests were hiding nuclear plants; and in their hotels on the shores of the baltic sea summering the dome of the Communist Party. Thirteen years later, when the decay of what swallowed everything, these three republics became part of the European Union (EU). With this turn towards the West, away from the communist past, but this year on the baltic states –especially Estonia— has been re-extend the shadow of Russia, this time to turn them in scenario of the most known case up to the time of laundering of Russian money in Europe. A machine laundering of more than 200,000 million euros through subsidiaries of banks nordic. “It is immense,” says about the case in a telephone conversation Maira Martini, a researcher at Transparency International (TI). The figure represents more than seven times the GDP of Estonia.
In the case of Danske Bank, its leaders in Tallinn seemed to be blind and not moved the evidence of the fraud to the national supervisor
Maira Martini, an expert in Transparency International
A fraud “huge” that led to the past September 25 to half a hundred police officers and volunteers to beat the forests around Pyrite, on the outskirts of Tallinn, the Estonian capital. It was sought to one of the bankers most relevant in the country (1.3 million inhabitants), disappeared 48 hours before. Aivar Rehe, of 56 years, had left two days before his home without a wallet or mobile phone. She never went back and that cold September morning, the Police found his body in the vicinity of his home with no signs of violence. The event —treated as a suicide and that authorities decided not to open an investigation— shocked the country and the media more reputed at the international level published the news. Why so much expectation?
Rehe was the president of the bank subsidiary of Danish Danske Bank in Estonia and had become a pivotal part, perhaps the last, to shed light on the biggest scandal of laundering of Russian money into the EU. “The branch [of Danske Bank] operated a huge portfolio of non-resident nationals [foreigners] who carried out a considerable volume of payments,” says a report from YOU of August of 2018 that figure in 35% of the profit of the subsidiary generated mostly by Russian customers in 2012 alone. “This should have called the attention of the supervisory authorities”, but “the bank never did the work reporting on the suspicious origin of the transaction,” says Martini, author of the report.
expand photo police search for the body of Rehe September 24, 2019, at the outskirts of Tallinn. Mihkel Maripuu
Despite several investigations of NGOS focused on corruption, there were no research officers until 2018, the year in which Danske Bank was forced to admit that between 2007 and 2015 were “suspicious transactions” to their subsidiaries in Estonia for a total value of 200,000 million euros. An amount equivalent to the GDP of New Zealand or Qatar. Rehe, in an interview months before his death, said they felt “responsible”, although it came to be imputed. “The bank is clearly not fulfilled its responsibility. It is disappointing and unacceptable,” noted the head of the entity, Ole Andersen, in a press release of September 2018, and by referring to the press. The entity also acknowledges that “there is no doubt that the problems related to the subsidiary in estonia were much higher than anticipated” .
in the Face of such a confession on the part of Danske Bank, the authorities in Estonian and Danish —and even community and americans— began their own investigations, which led to the resignation of Thomas Borgen, who was in the forefront of the company with headquarters in Copenhagen. They have also waived nine other officers. “It is clear that Danske Bank has not complied with its responsibility in the case of possible money laundering in Estonia. I deeply regret what occurred,” he said in a sober statement in which he took “responsibility” and said that it was clear that resigning was “the right thing”. The bank lost half of its value in just one month, between February and march of 2018.
expand photo Aivar Rehe, direct subsidiary estonia Danske Bank, in march 2019. Tairo Lutter Efe
The Project of Denunciation of the Corruption and Organized Crime (OCCRP, for its acronym in English), the organization that leaked the scandal and that has a great penetration in Eastern Europe, described in a research how the money is entered in these laundries “through a set of companies phantom created in Russia that exist only on paper and whose ownership cannot be traced”. As here does not apply to banking secrecy, the entities have the obligation to know and identify the source of the money that enters your accounts,” adds Martini. In the case of Danske Bank, its leaders in Tallinn seemed to be “blind” and not moved the evidence of the suspicious origin of the money to the national supervisor, insists. Contacted several times, Kilvar Kessler, the banking supervisor Estonian, has refused to talk with this journal.
there Are four nordic banks that have been involved in cases of laundering money of dubious origin in the baltic countries
The giant snowball of money laundering was great to splash, also to Sweden. Brigitte Bonnesen, president of Swedbank, presented his resignation last spring by another case of laundering of Russian money in its subsidiaries baltic encryption in around 5,500 million euros, which led to a devaluation of 38% of the shares of the entity, according to Bloomberg. And on the 27th of November, another Swedish bank, SEB Bank, admitted in a report picked up by the press-nordic in its subsidiary in estonia were washed about 26,000 million euros between 2005 and 2017. Before the rumors leading up to this latest research, the shares of SEB Bank, fell 10%. Next to the entity Nordea, which amount to around 700 million euros allegedly laundered, they are already four nordic banks used as a laundromat for Russian money of dubious origin in the baltic countries.
“Some countries in the baltic area are very vulnerable to money laundering, especially from Russia”, warned last January in a press release on Pedro Felicio, then expert of Europol in laundering. The person who now leads the investigations of Europol of this type of offences has declined to talk with this journal.
A soviet past, the closeness with Russia and the widespread knowledge of the language are the key to the baltic are en the first line of laundering of Russian money in Europe
The experts agree that the soviet past of these republics, their geographical proximity —just 300 kilometers separated Tallinn from St. Petersburg—, the use and widespread knowledge of the Russian (20% and 25% of the population of Latvia and Estonia, respectively, spoken) are a key to the baltic are in the first line of the laundering of Russian money in Europe.
Another key is that the money laundering began just in the years subsequent to the entry of these countries into the EU in 2004. At that time, “the baltic states had less experience, and control systems much more lax than the rest of the members of the EU, and fraudsters took advantage of it” for decades, ” explains Martini. It was an opportunity for potential fraudsters or criminals linked to Russia, which still had a lot of influence at the political level and economic in the three baltic republics.
Bloomberg estimated that, since its independence from the USSR in 1991, they have washed around 800,000 million euros in the three baltic republics,
The flow of black money from Russia is not new. Bloomberg noted in the last number of QuickTake (July–December 2019) that since the collapse of the USSR, the amount of money of “doubtful origin” that has come out of Russia amounted to 800,000 million euros, slightly less than the GDP of the Netherlands. But the use of banks nordic whitening yes represents a change, a newness to the community authorities.
Despite the fact that no one has been prosecuted or jailed so far, the scandal has been a wake-up call in Brussels and Frankfurt, seat of the European Central Bank, and has opened a debate on the need to improve controls to identify and tackle joint economic crimes, especially money laundering.
The EU does not have a single agency dedicated to detect fraud. What there is, is a supervisor focused on maintaining the stability of the banks. So almost all the responsibility of fraud rests with banking supervisors national, which makes it difficult investigations that require a coordination of several countries. Proof of this is that the Danish authorities and the Estonian continue accusing each other of scandal in their subsidiaries in estonia, while the investigation is still open.
Other fraudulent schemes
Since its entry into the EU and therefore, their exposure to more stringent control, Latvia and Lithuania have also suffered severe cases of laundering of Russian money through its banks, or subsidiaries of foreign banks in its territory. In the case of Lithuania (known as Troika Laundriomat), the scheme of the fraud was similar to that of Estonia, but it involved other companies, intermediaries and also the owner of UKIO Bankas. “Now is persecuted by the authorities of the country, but according to some media reports, is in hiding in Russia,” reveals Maira Martini, expert of Transparency International. “UKIO Bankas had a huge portfolio of customers non-resident [foreign] in comparison with their size,” he says. Something that is clearly suspect.
In Latvia, the money-laundering scheme was different to that of Estonia because it almost always involved a citizen or a company of Moldova, according to the OCCRP. “Many banks are not doing their job [to figure out where they were coming from the income]. But it seems that now they have placed order and have strengthened the supervisory system” in Lithuania, ” concludes Martini.
