An outside audit commissioned in the wake of the Danske Bank scandal has found that Sweden’s Swedbank failed to ensure that money was not laundered through its own Estonian branch.
The amounts involved in the Danske Bank affair, involving non-resident accounts managed by its Estonian subsidiary, made it the largest money laundering scandal on record. Nevertheless, given that its peak in 2013, Danske had a market share of only around 9% of non resident accounts in the Baltic states, it has always been likely that the true scale of the illicit funds being moved was even larger.
Swedbank hired Forensic Risk Alliance to look into claims more than $10 billion in suspicious funds had moved between the bank and Danske’s troubled Estonian branch. Many passages in the draft report acquired by Swedish broadcaster SVT have been redacted.
After SVT’s report one of the bank’s major investors, Alecta, said that neither the handling of the audit or a continuing probe was enough to restore trust. After subsequent reports suggesting that a Swedbank account was used to conceal bribes to former Ukrainian president Yanukovich, Swedbank CEO Birgitte Bonnesen was fired.
The Swedish bank conducted a review of its Estonian branch after rival Danske Bank revealed its operation there had been used to funnel some 200 billion euros ($227 billion) of suspicious payments between 2007 and 2015, said Reuters. Extracts from the report quoted by SVT found “major breaches of AML obligations“ in Swedbank’s Estonian branch, which “failed to report suspicious transactions and activities.”
Critics said that a fuller investigation was needed. “We had expected more,” said Johan Sidenmark, Chief Executive of AMF, the country’s third biggest pension fund. “Our assessment is that more is needed to strengthen confidence in the bank.”
Bill Browder, CEO at Hermitage Capital, filed a criminal complaint against Swedbank for its money laundering allegations. “This doesn’t give us any clearer picture how big the money laundering problem was,” he said.
“This report only focuses on 50 accounts identified by Swedish Public Television when there are thousands of accounts and millions of transactions which need to be analyzed.”
Swedbank’s review of the 50 accounts aimed to confirm whether they had been customers of the bank and if it broke off dealings but that information was redacted in the final report.
“It is not enough for us to feel that we have received all the answers we need,” Sweden’s Financial Services Minister Per Bolund told SVT about the bank’s shortcomings.