Swedbank Publishes Clifford Chance Findings on AML Missteps
24 Mar 2020

Swedbank AB on Monday published a third-party report outlining more than a decade of compliance missteps that led to the Swedish institution’s processing of some $40 billion in transactions deemed to pose a “high risk” of money laundering.

The 218-page report by law firm Clifford Chance concluded that, while Swedbank did not necessarily facilitate money laundering, the bank’s affiliates in Estonia and Latvia actively pursued high-risk customers, including those whose services had been terminated by other financial institutions over compliance concerns.

The release of the report, which was paid for by Swedbank, follows the imposition last week of a record $386-million fine against the bank by Sweden’s financial supervisor for lax anti-money laundering controls. Earlier this month, Swedbank disclosed that Clifford Chance had separately identified 586 transactions, worth an aggregate $4.8 million, that had likely violated US sanctions imposed in the wake of Russia’s 2014 takeover of the Crimean peninsula.

From 2007 through 2019, Swedbank’s senior management failed to delineate clear lines of compliance responsibilities while the lender’s chief executives during the same period did not sufficiently understand the financial-crime risks posed by wealthy non-resident customers, according to the report, which did not determine that any illicit funds flowed through the bank’s accounts.

The bank’s Estonia-based staff were, at times, willfully blind to potential compliance violations linked to its high-risk, non-resident (HRNR) clients, according to the report.

Swedbank Estonia “accepted customers despite awareness amongst employees, including relationship managers, that the listed beneficial owners were not the actual [ultimate beneficial owners, or UBOs], and in situations in which the prospective customer refused to provide verifiable beneficial ownership information,” Clifford Chance said. “Swedbank Estonia employees also accepted customer corporate structures knowing that they were designed to conceal the true UBOs from home country tax authorities.”

“Lastly, Swedbank Estonia employees also repeatedly overlooked or disregarded indications of potentially suspicious transactions,” the law firm 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,” Swedbank President and CEO Jens Henriksson said in a statement accompanying the report.

The Swedish lender was previously named in media reports alongside Danske Bank and other financial institutions for its alleged role in processing $155 billion in potentially suspicious payments tied to Russian organized crime and other bad actors.

Read the full report here

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