October 12, 2018 / 10:39 AM / 7 months ago

UPDATE 2-Danske Bank begins scaling back scandal-hit Estonian branch

* Danske Bank scaling back in the Baltics to focus on the Nordics

* Estonia Finance Ministry is closing its account at Danske Bank

* Plans for comprehensive money laundering report - Finmin (Adds Estonian plans for money laundering report)

By Teis Jensen and tarmo virki

COPENHAGEN/TALLINN, Oct 12 (Reuters) - Danske Bank said on Friday it has begun closing down parts of its Estonian business which has been at the centre of an investigation into alleged money laundering and prompted a U.S. criminal investigation.

The scandal involves 200 billion euros ($230 billion) in transactions processed by Denmark's biggest bank via its Estonian branch between 2007 and 2015, many of which the bank said last month it thinks are suspicious.

The bank said in April it would scale down its business in the Baltic countries to focus on the Nordic markets.

It said it would serve only subsidiaries of its Nordic customers in the Baltics and global companies with business interests in the Nordics.

"We're writing to both private and corporate customers that we have to close down their products and services," a Danske Bank spokesman said on Friday.

The Danske Bank case has triggered calls from politicians and regulators for greater oversight of banks and a tightening of European rules relating to anti-money laundering measures. It has also cost the Danske Bank chief executive his job.

The Danske Bank spokesman would not say how many accounts it is closing or how many jobs would be affected by the process, which began in late April and will last for around a year.

The time taken was due to the dialogue the bank had with customers and the various notice terms, he added.

Estonia's Ministry of Finance will close its accounts at Danske Bank's Estonian branch as of the end of November.

"As Danske Bank has declared that in the future they will concentrate only on servicing non-resident business clients and their subsidiaries in Estonia, the Ministry does not deem it necessary to have accounts there any more," a spokeswoman said.

Estonia's Finance Ministry will this month present to the government a plan for an independent report into alleged money laundering in the country between 2007 and 2015.

It will include proposals on how to right expert to investigate and defining the exact objectives and scope of the report, a spokeswoman for the ministry told Reuters.

"Including an independent expert will help to guarantee that the government, as well as the public, will have a comprehensive overview of the events and the situation at the time under question from Estonia’s perspective," she said.

"The aim is to integrate all available relevant information gathered by different inquiries into one comprehensive report," she added.

Reporting by Teis Jensen and Tarmo Virki; Editing by Mark Potter and Alexander Smith

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