Wednesday, October 28, 2020

Swedbank admits money laundering flaws, faces multiple U.S. probes

-

Swedbank admitted to failings in combating money laundering on Thursday and said it was under investigation by multiple U.S. authorities, piling more pressure on the bank as it tries to rebuild its reputation.

Sweden’s oldest bank, whose CEO and chairman have both left as money laundering allegations snowballed, is already facing a joint probe by financial watchdogs in Sweden and the Baltics and another by Sweden’s economic crimes body.

Swedbank has found itself caught up in a regional money laundering scandal originating with Danske Bank, which said last year that 200 billion euros ($223 billion) of suspicious funds moved through its Estonia branch between 2007 and 2015.

Swedish broadcaster SVT has reported that Swedbank processed gross transactions worth up to 20 billion euros a year from high-risk, non-resident clients, mostly Russian, through its Estonian branch from 2010 to 2016.

- Advertisement -

Any action by U.S. authorities, such as the Department of Justice or the Securities and Exchange Commission, is a key concern for investors because of the size of potential U.S. sanctions could dwarf those from local watchdogs and even jeopardize Swedbank’s ability to transact in the U.S. dollar.

Swedbank did not name the U.S. watchdogs. The SEC and Sweden’s financial watchdog declined to comment.

Since allegations first surfaced in February, the bank had repeatedly said it had faith in its anti-money laundering procedures and that suspicious transactions that were identified were reported to authorities.

But acting CEO Anders Karlsson, who took charge at the end of March, admitted on Thursday that previous internal investigations had indicated shortcomings.

- Advertisement -

He cited reports of certain customers identified in previous money-laundering cases not being flagged, weaknesses in know-your-customer procedures and a lack of reports to the authorities on some suspicious transactions.

“For Swedbank to deserve the trust of customers, authorities, investors, employees and other stakeholders, continuous improvement in our anti-money laundering work is required,” Karlsson told reporters.

Alecta, the banks’s third biggest investor which has criticized its handling of the crisis, praised Thursday’s disclosures, which its CEO Magnus Billing said answered a call for greater transparency made by investors.

“Swedbank is being transparent, cooperating with the authorities and working to restore trust, which is necessary and positive,” he told Reuters.

COST RISE

Swedbank’s shares, which has lost a quarter in value this year, were down 2.4 percent at 151.2 Swedish crowns by 1448 GMT, as the market also looked at lower-than-expected asset quality and common equity tier 1 ratio and worse-than-expected costs.

The company reported first-quarter headline costs of 4.52 billion Swedish crowns, a 2 percent miss versus consensus, due to expenses incurred to deal with money laundering allegations and severance paid to its former CEO Birgitte Bonnesen.

It forecast additional spending of 1 billion Swedish crowns in 2019, with about 650 million earmarked to hire staff to assist with the various investigations, beef up the compliance unit and set up a new unit to combat all areas of financial crime, Karlsson said.

Swedbank announced an in-depth internal probe was under way to review its current and historic customer relationships through its Baltic units, its response to previous internal reviews and its anti-money laundering compliance processes.

“It is good that the bank now addresses the problems of money laundering by deepening and broadening the internal analysis,” Carina Lundberg Markow, chief strategist on responsible investment at Folksam, Swedbank’s second-largest investor, told Reuters.

SEB Investment Management, which has halved its stake in Swedbank since the scandal broke, sees it as a positive that the company is acting on a broad front, Hans Ek, acting head of SEB Investment Management said via email.

MUST READ

Beam Suntory Inc. fined $19.6 million in foreign bribery case

Beam Suntory Inc. (Beam), a Chicago-based company that produces and sells distilled beverages, has agreed to pay a criminal monetary penalty of $19,572,885 to...

Julius Baer to deny two former CEOs their bonuses over money laundering scandal

Julius Baer will withhold millions of francs in bonuses from its former chief executives Boris Collardi and Bernhard Hodler, as a result of a...

Goldman Sachs executives to cover part payments of $3 billion fines in 1MDB scandal

Nine current or former Goldman Sachs executives, including CEO David Solomon, will have to pay back hundreds of millions of dollars in compensation over...

Goldman Sachs agrees $3 billion settlement with US DoJ over 1MDB corruption scandal

Goldman Sachs has agreed to pay nearly $3bn (£2.3bn) in the US to end a probe of its role in Malaysia's 1MDB corruption scandal. The...

Hong Kong fines Goldman Sachs $350 million over 1MDB scandal

Goldman Sachs ignored multiple red flags over the multibillion-dollar fundraisings it arranged for state fund 1Malaysia Development Berhad, Hong Kong’s financial regulator said on...

Subscribe For More

Get our daily notification on the latest financial crimes news around the World

Advertisement
Advertisement

Latest News

This Week

Spanish police arrests operator of Crypto Arbitrage firm Arbistar on fraud charges

The CEO of Arbistar the Spanish investment company, Santiago Fuentes, has been arrested and arraigned on charges of fraud, belonging to a criminal organization...

Swiss court upholds money-laundering conviction of ex-Ukrainian lawmaker Martynenko

A Swiss court has upheld the conviction of former Ukrainian lawmaker Mykola Martynenko for laundering via Swiss banks millions of dollars worth of kickbacks...

Former Blue Bell Creameries CEO indicted for fraud linked to 2015 listeria outbreak

The former president and CEO of Blue Bell Creameries L.P., a Texas ice cream company, was indicted Tuesday on wire fraud charges in connection with a scheme...

UK regulators fine Goldman Sachs £97 million over 1MDB scandal

Goldman Sachs International has been fined £96.6m by UK regulators for risk management failures connected to the 1MDB scandal. The Financial Conduct Authority and Prudential...
Advertisement

Adblock Detected!

Our website is made possible by displaying online advertisements to our visitors. Please consider supporting us by whitelisting our website.

Enable Notifications    Ok No thanks