The European Central Bank has revoked the licence of Estonia’s Versobank after it failed to deal adequately with regulatory problems related to money laundering.

The ECB withdrew the small bank’s licence after Estonia’s financial watchdog, Finantsinspektsioon, asked it to do so.

Finantsinspektsioon said that the action against Versobank was “an isolated case” and did not affect other banks in the country, whose currency is the Euro.

"The withdrawal of the authorisation of Versobank AS is a clear signal that Estonia will not tolerate breaches of anti-money laundering and combating of terrorism law,” said Finantsinspektsioon chairman Kilvar Kessler.

The action against Versobank comes as Baltic states’ leaders prepare for a summit meeting with US President Donald Trump next week, where the countries will talk about the fight against money laundering – one of the Americans’ main concerns in the region.

Danske Bank, the Nordic lender which offers private banking services, has also felt heat from regulators and shareholders over failings in its anti-money laundering regime at its Estonian branch.

Estonia’s authorities said last month that they would open an investigation into Danske Bank after reports in the media claimed that it had been aware of money laundering allegations at its Estonian business as far back as 2013.