Swedbank’s leadership ignored money laundering risks as suspicious transactions worth €37bn flowed through the bank – probe reveals

Beleaguered lender Swedbank has responded to a damaging report revealing that more than €37bn worth of suspicious transactions flowed through the bank between 2014 and 2019.

The report was written by law firm Clifford Chance. The independent report noted that the bank’s leadership failed to see the risks of letting high-risk non-residents use the bank.

The legal firm had forensic support from FRA and FTI. The investigation looked into factors such as customers, transactions and activities from 2007 through March 2019. It also investigated the bank’s handling of internal and external information disclosures.

And it has found the bank’s efforts to be wanting. It revealed that Swedbanked processed transactions representing a high risk for money laundering were made in the form of payments to customer accounts worth €17.8bn and payments from customer accounts worth €18.9bn in the Baltic subsidiaries. Although Clifford Chance could not conclude that money laundering had occurred.

The report explained how the lender’s Estonian and Latvian branches had actively pursued high-risk customers, with Swedbank Estonia accepting certain high-risk customers who another Estonian bank had decided to stop trading with them.

The law firm accused Swedbank of having failed to establish clear anti-money laundering (AML) processes and guidelines between 2007 and 2019.

Even more damning, Clifford Chance stated that Swedbank’s former CEO Birgitte Bonnesen had failed to show enough understanding of the risk posed of letting these high-risk non-resident customers use the bank’s services to the bank. The law firm also said that it believed made by her between October 2018 and February 2019 concerning money laundering, were inaccurate or presented without sufficient context.

The bank’s board, Clifford Chance argued, had demonstrated significant shortcomings in addressing its AML shortcoming and failed to ensure management did more to prevent money laundering.

Clifford Chance noted that Swedbank has fully cooperated with the investigation and that the lender had zero influence on the conclusions.

“Clifford Chance’s report confirms the bank’s failure,” said Göran Person, chairman of Swedbank and former prime minister of Sweden. “In its anti-money laundering work, the bank has not measured up to the requirements that customers, owners and society are entitled to set. We now have the facts and are working hard to solve the problems.”

Clifford Chance also notes that high-risk customers in Baltic Banking were allowed to open accounts in the bank’s other business areas in Sweden – Swedish Banking and LC&I. Clifford Chance further notes that all of these customers have been offboarded.

Bonnesen was fired in March 2019 after the money laundering scandal came to light. In the response to the Clifford Chance report, Swedbank’s board has decided to cancel all severance pay to her. The payments were plain ed to start as of the March 29 this year.

“It is obvious that there have been cultures in the bank that are not acceptable,” said Jens Henriksson, Swedbank’s new president and CEO. “This is serious. I have initiated a review which aims to examine the culture and identify actions needed. This work is under way.”

Some of the actions instigate since 2019 include implementing an action program which at year-end consisted of 152 initiatives. Apart from the new chairman and CEO, the bank has also appointed a new vice chairman, chief compliance officer, head of group communications and a new chief risk officer.

Swedbank is still investigated by authorities in Sweden, the US and Estonia.

The shortcomings of Swedbank is part of the bigger Danske Bank money laundering scandal that has swept across Europe over the past few years. In 2018, the Danish lender was revealed to have processed about $223bn in suspicious transactions. As a consequence of these findings, several of the bank’s executives have been arrested, the CEO has left the company and more than 18,900 customers have abandoned the lender. Investigations into the Danske Bank’s wrongdoings are still ongoing.

While the scandal has meant that confidence in Nordic traditional banks have taken a tumble, FinTech Global has reported that it could also provide the perfect opportunity for the region’s nascent challenger bank sector to strengthen their hold of the market.

Enjoyed the story? 

Subscribe to our weekly RegTech newsletter and get the latest industry news & research

Copyright © 2018 RegTech Analyst


The following investor(s) were tagged in this article.