Sunday 22 September 2019

Money-laundering scandal set to spread, warn Danes

Probe: Bill Browder said the Baltic nations and Cyprus are the entry point to the EU for money laundering
Probe: Bill Browder said the Baltic nations and Cyprus are the entry point to the EU for money laundering

Frances Schwartzkopff

First it was subprime mortgages, then European debt. Now, it's money laundering.

In Denmark, where the latest crisis first grabbed the public's attention thanks to Danske Bank, the government has some worrying observations on what went wrong and what the scandal might mean for European ambitions to build a single market for financial services.

In an interview in Copenhagen, Danish Business Minister Rasmus Jarlov said confidence in doing business across borders suffers when efforts to police suspicious money flows fall short.

"It obviously doesn't do a lot of good for the trust between banks that operate in different markets [when you have] cases like this," he said. "One of the problems with free trade is that something that starts one place spreads to other countries," Mr Jarlov said.

It's slowly dawning on legislators in Europe that a money-laundering crisis they thought was limited to the Baltic and Nordic countries has spilled into the rest of the EU. A picture is emerging in which criminals, mostly from Russia, sought out the weakest links in the chain surrounding the EU to gain access to the wider Western financial system.

Mr Jarlov said legislators struggle to keep up with the perpetrators. "The financial system is so complex that there could be so many ways of exploiting it that we have not even thought of."

According to Bill Browder, the co-founder of Hermitage Capital Management who's best known for his work chasing Russian money launderers, their entry point into the EU is the Baltic countries and Cyprus - the transit zone, as he characterises it. From there, the dirty money makes its way to the rest of Europe.

"It's going to places where people want to spend it,"

Mr Browder said in an interview with Bloomberg Television. He says the UK has traditionally been a magnet for such funds.

Though many banks all across Europe have now been implicated, Danske remains at the centre of the scandal. Its tiny Estonian branch allegedly handled about $230bn in questionable funds between 2007 and 2015. Danske recently announced a full retreat from the Baltics and Russia.

Steen Lohmann Poulsen, deputy permanent secretary for financial affairs at Denmark's Business Ministry, says they never expected to be dealing with a massive money-laundering scandal. "Not in our wildest dreams," he said. "That was a huge shock."

But it was also "a shock at the European level", he said.


Irish Independent

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