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Swedbank failings on €37bn of transactions revealed in report

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Via Financial Times

Swedbank carried out €37bn of transactions with a high risk for money laundering over a five-year period, according to a damning report that shows the Swedish bank actively targeted high-risk individuals in the Baltic region and points to failings from both top management and the board. 

The report published on Monday by Clifford Chance, the UK law firm hired by Swedbank, lays bare how the biggest bank in the Baltics lacked proper systems and controls to combat money laundering, and how about $4.8m of transactions could have broken US sanctions. 

“Clifford Chance’s report confirms the bank’s failure. In its anti-money laundering work, the bank has not measured up to the requirement that customers, owners and society are entitled to set. We now have the facts and are working hard to solve the problems,” said Göran Persson, the former Swedish prime minister drafted in last year as chairman to help clean up. 

Swedbank’s shares have dropped by more than 40 per cent since the first money laundering allegations appeared in February 2019, and the bank has since ousted both its chief executive and chairman. Last week it was fined a record SKr4bn ($380m) by Swedish and Estonian regulators and is still facing an investigation in the US, which could lead to larger fines, as well as criminal probes in Sweden and Estonia. 

Swedbank said it would “unilaterally cancel” the severance pay of Birgitte Bonnesen, its former chief executive from 2016 until 2019, after the report said certain statements by her in late 2018 and early 2019 were “inaccurate or presented without sufficient context”.

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It added that it would not be pursuing a legal claim against Ms Bonnesen following “legal assessment of the conditions for such a potential process”. A lawyer for Ms Bonnesen was not immediately available for comment. 

Clifford Chance’s report focuses only on transactions between 2014 and 2019 whereas Danske Bank, the first Nordic bank to come under pressure over money laundering, revealed it has €200bn of potentially suspicious transactions over a 10-year period. According to a previous internal report from Swedbank, seen by Swedish public broadcaster SVT, more than half of the high-risk flows in its Estonian branch occurred between 2006 and 2013. Swedbank said last week the report would focus on 2014-19 due to the statute of limitations for financial crime. 

Picture taken on March 22, 2019 shows Swedbank's CEO Birgitte Bonnesen during an interview in Sockholm, Sweden. - Swedbank, in the focus of investigators in connection with a larger money laundering scandal, has fired its CEO Birgitte Bonnesen on March 28, 2019. (Photo by Janerik HENRIKSSON / TT News Agency / AFP) / Sweden OUTJANERIK HENRIKSSON/AFP/Getty Images
Birgitte Bonnesen © AFP

The report stated that both Ms Bonnesen, a former head of Baltic banking, and her predecessor as chief executive, Michael Wolf, in charge from 2009 until 2016, “appeared to lack adequate appreciation for the severe risk” from its high-risk, non-resident business in Estonia, Latvia, and Lithuania. The business mostly dealt with Russian and other ex-Soviet customers. 

Swedbank’s board did not challenge management on the problems with anti-money laundering controls presented to it, according to the report. 

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

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