Swedbank probe unearths $40b of ‘high risk’ payments

Bloomberg

An investigation paid for by Swedbank AB into allegations of financial crime found that client transactions totaling 36.7 billion euros ($40 billion) represented a “high risk” of money laundering.
“It’s obvious that there have been cultures in the bank that are not acceptable,” Swedbank CEO Jens Henriksson said in a statement on Monday. A review has been launched to find out what went wrong and how to avoid a repeat, he said.
The UK-based law firm Clifford Chance’s report commissioned by Swedbank follows a decision by Sweden’s financial regulator to fine the lender a record $385 million. That followed an investigation into allegations Swedbank may have handled upto $155 billion in potentially suspicious transactions.
Earlier this month, Swedbank said Clifford Chance uncovered 586 transactions worth about $4.8 million that were probably on wrong side of US sanctions laws. Most of those were related to a vessel whose owner and operator were in Crimea, Ukrainian peninsula that was annexed by Russia in 2014. Investigators are still looking into the case and Swedbank may yet face a US fine.
The Swedbank case forms part of a broader complex of scandals that includes Danske Bank A/S and revealed a systematic flow of dirty money from the former Soviet Union via the eastern outposts of Nordic banks and into the West. A similar probe into SEB AB is still ongoing, according to Erik Thedeen, the head of Sweden’s FSA.
In its report, Clifford Chance said it can’t conclude that money laundering actually took place. But Goran Persson, Swedbank’s chairman since June, said, “Clifford Chance’s report confirms the bank’s failure.”
In a statement, the bank said the board had cancelled the severance pay for Bonnesen, but had decided not to make claims against her. Bonnesen’s so-called termination benefits would have totaled 26.6 million kronor in 2019, bringing her total compensation for the year to 30.7 million kronor, according to Swedbank’s annual report. Bonnesen was fired a year ago after misleading the public as to the scale of the bank’s dirty money scandal.
In Monday’s report, Clifford Chance wrote that between 2007 and 2019, “the bank’s senior management failed to establish clear lines of AML-related responsibilities and that Swedbank’s CEOs throughout the review period all had a lack of adequate appreciation for the risk posed by the high-risk non-resident customers to the bank.”

Per Hansen, an investment economist at Nordnet in Copenhagen, said the fine imposed by Swedish authorities points to the questionable role played by Swedbank’s ousted CEO, Birgitte Bonnesen.
“The Swedish FSA made it pretty clear,” Hansen said in a note to clients. “Management wasn’t cooperative enough, leaving no doubt that this was a very important and aggravating circumstance in determining the size of the fine.”