Swedbank CEO survives initial review of money laundering concerns

Swedbank, the Swedish financial group, has published the first phase report into allegations of money laundering conducted through its Baltic office, with the company's board expressing continued support for CEO Brigitte Bonnesen.

"After reviewing the FRA Update, the board confirms its continued confidence in the CEO and her ability to lead and manage the bank's work in the fight against money laundering. Swedbank takes its anti-money laundering responsibilities very seriously, and focuses on the continuous improvements of its ability to fight financial crime," board chair Lars Idermark said in a statement.

"The board of directors is committed to making available all resources that the management requires to continue this important work. Therefore, the board has decided to conduct a deeper review in cooperation with the relevant authorities."

Bonnesen added in her own statement: "Swedbank is committed to high ethical standards and we acknowledge that the risk of financial crime is a major challenge to society. We will continue to invest in our processes and technology and ensure that improvements are integrated into effective and sustainable day-to-day risk management practices. I have also decided to establish a specialised Financial Crime Intelligence Unit to secure a continued focused approach as criminal behaviour develops over time. Our efforts to combat these risks will continue over time."

The bank has been forced to bring in outside independent analysis of its risk controls and know-your-client processes after news published by Swedish broadcaster SVT alleging a link in terms of clients between Swedbank and Danske Bank - the Danish group being investigated for facilitating massive money laundering via its Baltic presence. The scope of the failures at Danske Bank were so great the European Banking Authority announced in February this year "a formal investigation into a possible breach of Union law by the Estonian Financial Services Authority (Finantsinspektsioon) and the Danish Financial Services Authority (Finanstilsynet) in connection with money laundering activities linked to Danske Bank and its Estonian branch in particular." 

Today, 22 March, the Swedish Financial Supervisory Authority (Finansinspektionen) made its own announcement on the report issued by Swedbank.

"FI has received a copy of Swedbank's external review that was initiated by reports in the media of suspected money laundering in the Baltics."

"The report will be included in the investigation that FI and the supervisory authorities in Estonia, Latvia and Lithuania have started. FI is not able to comment further on this investigation at this point in time."

Also not commenting further is lead prosecutor Thomas Langrot of the Swedish Economic Crimes Agency (Ekobrottsmyndigheten), who issued a press release on 27 February noting that he had initiated an investigation into the 15 largest shareholders of Swedbank on allegations they were tipped off about the SVT broadcast ahead of time, thereby facilitating insider trading - Swedbank shares fell dramatically after the money laundering allegations were broadcast. 

Swedish media carry mixed comments in response to the report issued by Swedbank today; some suggest that the information made public is partly redacted and does not really answer the question whether the bank knew about the problem accounts but still did nothing, while others suggest that the information, albeit redacted, suggests that the bank knew there was a problem, but perhaps did not react forcefully enough. What does not help CEO Bonnesen, however, is that she has previously publicly stated that Swedbank did not have the same problems as Danske Bank; this has been referred to repeatedly by those who continue to call for her resignation or sacking.

 Joacim Olsson, chief executive of the Swedish Shareholders' Association (Sveriges Aktiesparares Riksförbund) has criticised the statement issued by Swedbank's board, noting that it does not go far enough in answering the tough questions facing the bank and it's own CEO.

"It is a report that is completely unfinished, which raises more questions than it answers. We do not know either what the bank's CEO knew when she went out and said that there were no skeletons in the closet. Against that background, it is strange that the board has given its support. It can be most closely compared to a methodology appendix to a tertiary essay. It is incomplete, there are no clear answers."

The Shareholder's Association notes that Swedbank has its annual general meeting on 28 March, when, among other matters, shareholders will vote on whether the CEO and the board are responsible in the matters raised. The Association stated that it would not vote to free them from responsibility if there are no clearer answers provided by then.

To view the Swedbank Phase 1 report from Forensic Risk Alliance, click the link to the pdf below: