Sweden Fines Swedbank $386M For AML Missteps

Sweden’s oldest retail bank will face a hefty $386 million fine for a scandal that erupted last year over the bank’s poor handling of money laundering issues in the Baltic region, according to Reuters Thursday (March 19).

Swedbank was reportedly processing transactions in Estonia of around 20 billion Euros from Russian non-residents, between 2012 and 2016.

Swedbank has already suffered some, seeing its share price fall by a third after the scandal’s details came out in the media. The scandal, which was revealed at the end of 2018, also involved Danske Bank, a peer of Swedbank’s. Swedbank’s CEO and much of the board were fired as a result.

FSA Director General Erik Theden told Reuters that the bank had inadequately prepared itself for money laundering in the Baltic operation, and also, on several occasions, failed to report instances that revealed the scope of the problems.

Estonia’s financial watchdog said there would also be an investigation into whether or not any money laundering took place in the case.

Swedbank first entered the Baltics in the 1990s after the Soviet Union disbanded. Now, it is the largest bank in Estonia. During the 2008-09 financial crisis, the bank signed up for a Swedish state aid scheme to try and avoid loan losses that posed a grave threat to the bank.

Also, Swedbank is under investigation in the United States. Last week the bank said it was under investigation for around $4.8 million in transactions that violated U.S. rules. Analysts, however, say the number of actual transactions was likely very small, in terms of the total potential breaches.

The penalty is higher than the previous record, in 2015 when the FSA hit Nordea with a fine of 50 million Swedish crowns, or $4.83 million, which was the limit on what was allowed at that time.