By Dominic Chopping

 

STOCKHOLM--Sweden's financial supervisory authority on Thursday handed Swedbank AB a 4 billion Swedish kronor ($397 million) fine after its investigation into the lender concluded that its Baltic operations had serious deficiencies in its anti-money laundering measures.

The Swedish FSA--known as Finansinspektionen--has been investigating Swedbank in cooperation with supervisory authorities in Estonia, Latvia and Lithuania since February last year, after a Swedish broadcaster reported that billions of dollars of illicit funds may have passed through the bank's Estonian branch.

In a statement Thursday, the FSA said the bank's awareness of the risk of money laundering and its processes, routines and control systems have been insufficient.

The Baltic operations were also lacking adequate resources to combat money laundering, it said.

"Our investigation shows that the Swedish management did not efficiently address the risk of money laundering in the Baltics," FSA Director General Erik Thedeen said.

"It is also deeply concerning that the bank on a number of occasions withheld information...that would have revealed the seriousness and scope of the problems.

Finansinspektionen said its investigation found that Swedbank had been aware of suspected money-laundering activities in the Baltics, and despite several internal and external reports warning about deficiencies in the Baltic subsidiaries and the risk of money laundering, the bank didn't take proper and sufficient action.

It said it also found a number of examples of how the bank withheld documentation and information that in retrospect reveal the seriousness of the situation.

The Estonian regualtor made the same discovery in the course of its investigation and has ordered Swedbank to take "comprehensive measures to properly understand and mitigate the risks it faced in the past and those it faces now."

The Estonian Prosecutor's Office is now investigating whether money laundering or other criminal acts took place in the bank.

 

Write to Dominic Chopping at dominic.chopping@wsj.com

 

(END) Dow Jones Newswires

March 19, 2020 13:38 ET (17:38 GMT)

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