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Just as we anticipated, the massive $150 billion money laundering scandal unfolding in the Estonian branch of Danske Bank has finally attracted the scrutiny of international regulators, who have seized on the opportunity to tighten the noose around the neck of criminals and corrupt oligarchs operating in the Commonwealth of Independent States.
According to the Wall Street Journal, the Justice Department, Treasury Department and Securities and Exchange Commission are each examining Danske Bank following a whistleblower complaint made two years ago. It's unclear for how long the investigations have been ongoing, though the conduct being investigated took place through 2015. The complaint also named Deutsche Bank and Citigroup as potentially complicit in the fraud, with DB acting as a correspondent bank on some of the transactions while some of the funds were run through Citigroup's Moscow branch.
Shares - News - Regulator - Scandal - Investigations
Shares are plunging on the news that a heavy-hitting international regulator is looking into the scandal, which has already spurred investigations in Denmark (where Danske is based) and Estonia (which is looking into the conduct of several Danske employees). Danske shares were down 5% in recent trading as fears of a potential "death blow sanction" - where a bank is excluded from handling dollars by the Treasury Department - intensified. Danske last year said it had initiated an internal investigation into the conduct. The money that flowed through its Estonian branch is several times larger than the annual flows through the Estonian banking system.
Meanwhile, CDS soared as investors rushed to protect themselves from a potential collapse.
...And this is why:
U.S. involvement in the case greatly raises the stakes for Danske Bank. It is already...
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