Internal Swedbank investigation reveals possible sanctions violations

An internal investigation conducted by Clifford Chance revealed that 4.8 million US dollars' worth of Swedbank transactions in Latvia, Lithuania and Estonia could have possibly been made in violation of U.S. sanctions, according to a Swedbank press release on March 11.

Swedbank has disclosed the findings in accordance with European Union regulations on market abuse, the Swedish Securities Markets Act, the Swedish Financial Instruments Trading Act and the regulatory framework of Nasdaq Stockholm.

“We are now immediately proceeding with a self-report to OFAC,” said Swedbank President and CEO Jens Henriksson, referring to the U.S. Treasury’s Office of Foreign Assets Control.

“This shows that the bank’s process for Know Your Customer, transaction monitoring and internal governance and control have had shortcomings. At the same time, it is some relief that it regards a relatively low amount and transactions such as salary payments,” said Henriksson.

Since February 2019 Clifford Chance has been investigating clients, transactions and other operations conducted from 2017 through March 2019, as well as the bank's anti-money laundering measures on behalf of the Board of Swedbank. They uncovered 586 suspicious, of which 95% were conducted in 2015 and 2016. Swedbank is ready to fully cooperate fully with the OFAC, and the bank's plan to combat money laundering and other financial crimes included 152 initiatives at the end of January.

As reported at the end of last year, investigations by Swedish Television (SVT) questioned the extent to which the Swedish banks Swedbank and SEB may have been used to launder large amounts of mainly Russian cash and circumvent international sanctions. The report centered on the Estonian operations of SEB and Swedbank, but could have knock-on effects on their other Baltic operations in Latvia, particularly in the context of suspicions of evading U.S. sanctions.

Previously Swedish Television (SVT) revealed how the business network of Iskander Makhmudov funneled hundreds of millions of dollars to tax havens through over 200 companies via Swedbank. 

As widely reported, until a few years ago the Scandinavian and Nordic banks operating in the Baltic states maintained a reputation for propriety while other local boutique banks gained a reputation for handling the accounts of oligarchs and criminals for money-laundering purposes.

Yet subsequent revelations about banks including Danske, Nordea and now the two largest Scandinavian banks operating in the Baltic, suggest the differences between the two groups of banks may not have been as great as was assumed.

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