Swedbank investigation finds potential money laundering incident

A money laundering investigation into Swedbank has found that transactions totalling around $4.8m constitute as sanction violations.

Due to this outcome, the Swedish bank is notifying the US Treasury’s Office of Foreign Asset Control (OFAC).

The OFAC enforces compliance with US sanctions imposed against countries or specific targets such as an organisation, company or individual. An example of a sanction breach would be a bank processing a transaction involving an OFAC sanctioned person, entity or jurisdiction and the US financial system, or person or other US elements.

Law firm Clifford Chance conducted an investigation into Swedbank, on behalf of the bank’s board, looking into clients, transactions and activities between 2007 and March 2019 and how it handled internal and external disclosures. The legal firm also examined how Swedbank responded to historically to identified AML and sanctions controls shortcomings.

During the investigation it looked at all USD denominated transactions from three Baltic subsidiaries in Estonia, Latvia and Lithuania, processed through the US financial system between March 2014 and March 2019.

Clifford Chance found 568 transactions, which amount to $4.8m, which constitute potential OFAC violations. Of these, 508 of the transactions constitute salary payments and payments associated with the operation of a vessel whose owner and operator are located in Crimea, a region subject to US economic sanctions.

The bank has taken “extensive work” to remedy shortcomings in its fight against money laundering, it claims.

Swedbank has reported the suspicious transactions to the OFAC and is awaiting their decision and potential consequences.

Swedbank president and CEO Jens Henriksson said, “I have been clear regarding the fact that Clifford Chance is to report any suspected sanction breaches that they may have come across in the investigation. This has now occurred. We are now immediately proceeding with a self-report to OFAC.

“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.”

The Danske Bank money laundering scandal in 2018 has put trust issues in the Nordics and traditional financial institutions, potentially paving a path for challenger banks.

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