Law Firm Hired by Swedbank Confirms Anti-Money Laundering Shortcomings

    By Dominic Chopping

STOCKHOLM--The law firm hired by Swedbank AB to investigate the bank's potential involvement in historical money-laundering said Monday that it found the bank had inadequate systems to manage money-laundering risk, but that it didn't conclude that Swedbank engaged in money laundering.

The law firm found payments to customer accounts worth 17.8 billion euros ($19.03 billion) and payments from customer accounts worth EUR18.9 billion in the bank's Baltic subsidiaries between 2014 and 2019 that represented a high risk for money laundering.

However, it said it cannot conclude that money laundering has actually taken place.

Swedbank came under scrutiny in February last year after a Swedish TV show reported that billions of dollars of potentially illicit funds may have passed through the bank's Estonian branch. In response, it hired law firm Clifford Chance to investigate customers, transactions and activities from 2007 through March 2019 and how the bank handled internal and external information disclosures.

It has also assessed Swedbank's historical response to previously identified deficiencies.

In this work, Clifford Chance considered billions of transaction records, around 160 million customer records, more than 38 terabytes of electronic and scanned hard copy data from Swedbank's internal files and conducted 100 interviews of 81 people.

Clifford Chance on Monday presented its findings, saying it had found a number of shortcomings in Swedbank's anti-money laundering work.

It said Swedbank Estonia and Swedbank Latvia actively pursued high-risk customers and Swedbank Estonia accepted certain high-risk customers who had been offboarded as customers in another bank in Estonia. High-risk customers in Baltic banking were also allowed to open accounts in the bank's other business areas in Sweden.

Following early findings from the probe, Swedbank recently notified the U.S. Treasury Department's Office of Foreign Assets Control of potential sanctions violations regarding $4.8 million of transactions.

Last week the Swedish financial supervisory authority handed Swedbank a 4 billion-Swedish kronor ($384.5 million) fine after finding the lender's Baltic operations had serious deficiencies in its anti-money laundering measures as well as shortcomings in its cooperation with the investigation.

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

(END) Dow Jones Newswires

March 23, 2020 03:06 ET (07:06 GMT)

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