By Dominic Chopping


STOCKHOLM--The law firm hired by Swedbank AB to investigate potential historical money laundering said Monday that it found the lender had inadequate systems to manage risk but 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 actually took 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 to March 2019 and how the bank handled internal and external information disclosures.

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 customers of 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.

The bank took on high-risk customers without proper documentation and some employees kept client information outside of Swedbank's regular customer databases and repeatedly overlooked potentially suspicious transactions, Clifford Chance said.

In addition, the law firm said that Swedbank CEOs appeared to lack an adequate appreciation for the risk posed by the high risk non-resident business in the Baltics.

It said that former CEO Michael Wolf, who served from 2009 through 2016, failed to focus on anti-money laundering deficiencies in the Baltics, despite recurring reports and a Swedish FSA report indicating such deficiencies.

It said Birgitte Bonnesen, the CEO who served from 2016 through 2019, took significant steps to de-risk the non-resident business in the Baltics and launched internal investigations.

"However, the CEO did not direct sufficient resources, attention, or urgency to the remediation of the issues identified, and did not ensure that information regarding these issues was shared between relevant Swedbank control functions or with the management," Clifford Chance said.

"Nor did this CEO ensure that the board was adequately educated or apprised of the significant legal and reputational risk that these anti-money laundering deficiencies...presented to Swedbank."

As a result, Swedbank said Monday it had decided to cancel its severance pay agreement with Ms. Bonnesen but will not make claims against her.

Finally, the Clifford Chance probe identified a number of employees whose actions or inaction caused or contributed to the failures. These employees ranged from senior managers to relationship managers and have subsequently been fired, the bank said.

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 four 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.

The bank said Monday it won't dispute the FSA's decision.


Write to Dominic Chopping at


(END) Dow Jones Newswires

March 23, 2020 04:31 ET (08:31 GMT)

Copyright (c) 2020 Dow Jones & Company, Inc.