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Got a load of dirty money and want to clean it up? The great European Union laundromat awaits you. Estonia in particular has been a godsend to the millionaires and billionaires from Russia, Azerbaijan and other countries who want to add a dash of geographic diversity to their licit and illicit fortunes.

The Estonian laundromat has finally shut down, but the unscrupulous who used it had a great run. This week, following uncomfortable new revelations about the extent of Estonia’s €200-billion ($303-billion) money-laundering scandal, Thomas Borgen, CEO of Denmark’s Danske Bank, whose Estonian branch was at the centre of the washing exercise, announced his resignation.

Investigations are under way, criminal prosecutors are circling and hefty fines or worse are inevitable. And just wait until the U.S. regulators get involved. The Americans more so than the Europeans take a dim view of shabby anti-money controls and their repercussions, which can include terrorist financing.

What was most shocking about the Estonian money-laundering scandal was that the first warnings came more than a decade ago and nothing was done about them. Perhaps even worse, the EU seems set to miss an opportunity to learn from the Estonian debacle and create a credible anti-money laundering system: It wants domestic regulators to continue to take responsibility for detecting and prosecuting these crimes even though they are clearly not up to the job.

Danske is no shady operator. It is Denmark’s largest bank, operates in 16 countries, is listed on the Nasdaq OMX exchange in Copenhagen and is allegedly well regulated by a government with a renowned reputation for transparency. Danske entered the Estonian market in 2006, when it bought a Finnish bank with an Estonian subsidiary. Under Danske’s control, that subsidiary would expand like crazy, yet no one thought to examine why. As it turned out, management genius could not take the credit. Money-laundering could.

The Estonian branch represented well less than 1 per cent of Danske assets yet its profit and returns were extraordinary. According to a report published on Sept. 19 by Danske’s own lawyers, the branch’s return on equity went to 58 per cent in 2010 from 45 per cent in 2007. The return on allocated capital – another measure of profitability – was an eye-popping 60 per cent in 2013, while at the bank’s Latvian branch it was only 7 per cent.

The Estonian division’s overall contribution to Danske group profit went from 1.6 per cent in 2007 to 10.7 per cent in 2011.

Normal growth could not explain this outperformance and several warnings that something was amiss were either ignored or not taken seriously enough. The first warning came in 2007, when the Russian central bank told Danish regulators, who in turn told Danske, that the Estonian branch was possibly being used for tax and customs payments evasion and “criminal activity in its pure form, including money laundering.”

A few years later, as non-resident money gushed into the Estonian branch, Danske executives were questioned by Estonian and Danish regulators about the rising number of suspicious transactions. It wasn’t until 2014, when a whistle-blower raised the alarm about probable rampant money-laundering, that Danske concluded that its anti-money laundering controls were woefully inadequate. Still, it took almost two years before the last of the non-resident accounts were closed.

A year later, the Danish newspaper Berlinske began publishing investigative stories about the money laundering at Danske, blowing the crisis wide open. In a story published last month, the paper said that “large and deeply suspicious money flows were channelled unhindered” through the Estonian branch and that “suspicious transactions appear to have been used by the family of Russia’s President Putin, the Russian intelligence service, and the Azerbaijani regime.” The Danske lawyers’ report notes that the whistle blower in 2013 had warned about possible non-resident accounts connected to the Putin family.

The numbers are disturbing. The report concludes that over the nine years to 2015, the flow of money into non-resident accounts at Danske’s Estonian branch reached €200-billion. The bank has conceded that a “significant” amount of that figure came from dubious sources. “So far, approximately 6,200 customers have been examined, and the vast majority of these customers have been deemed suspicious,” the report says.

There is little doubt that more heads will roll at Danske and that the inevitable fines will be costly, potentially exceeding the €775-million that Dutch bank ING agreed to pay earlier this month to settle money-laundering charges. Danske has a lot of explaining to do and, already, Britain’s National Crime Agency has opened a criminal investigation into British-registered limited liability partnerships with links to Danske.

The European Commission is under enormous pressure to crack down on money laundering in the EU. Its plans look weak. It wants national authorities and regulators to continue to do the cracking down. But it is these same authorities and regulators who failed so many times to stem the rise of money laundering.

Banking is borderless in the EU, thanks to the “passporting” system, and the EU countries in response set up centralized bank supervision through the European Central Bank. The EU needs an anti-money laundering agency of hefty stature. Adding a few more bodies to the European Banking Agency, whose main role is to design stress tests, isn’t enough. If a powerful new agency isn’t created, Europe will see more cases like Estonia’s.