AML: Record fine gives Swedbank a chance to move on

Proof of the Swedish supervisor’s mettle raises questions about the Danish response to money laundering.

A fine levied against Swedbank for money-laundering deficiencies of SEK4 billion (€360 million) on March 19 is far bigger than any Scandinavian financial supervisor has ever levied before. The only such penalty that has been bigger anywhere Europe is a €775 million ING settlement in the Netherlands in 2018. It proves that European anti-money laundering (AML) regulators are finally catching up with the huge fines the US has imposed. It also gives the impression that Sweden is trying hard to mend the reputation of its banking sector after a series of Nordic money-laundering scandals, which the local supervisor Finansinspektionen at first wrongly insisted would not touch Sweden. In a country with relatively little enthusiasm for closer European integration, it might even suggest a new European AML agency is not so urgent, after all, and that national supervisors in northern Europe can be trusted to properly deal with their banks.

The unusual size of the fine is, one hopes, down to the bigger volume of flows, rather than the attention it has received. A bank-commissioned report by Clifford Chance on March 23 identified €37 billion of potentially suspicious transactions by Swedbank’s Baltic subsidiaries between 2014 and 2019. For Swedbank, which has enough capital to absorb the fine without even affecting its dividend policy, this is a chance to move on and focus on its business, including in Estonia, which was the source of the trouble. Danske Bank It’s natural, then, to ask how the situation at Danske Bank compares. The latter’s Estonian branch was the epicentre of the Nordic money-laundering crisis in the latter part of the last decade, handling €200 billion for non-resident clients between 2007 and 2015.

Yet Danske has not yet received any fine from its home supervisor the Danish Financial Services Authority for its problems in Estonia. Göran Persson, Swedbank’s chairman, told journalists that its management’s lack of truthfulness in late 2018 was ‘a decisive mistake’  It should be noted that Swedbank is still subject to criminal investigations in Estonia, while Danske faces a criminal investigation in Denmark, too. Both banks are awaiting news of investigations in the US. Yet Danske has clawed back some respectability in Denmark since the full scale of suspicious money it handled became clear in September 2018. It donated an equivalent of $222 million to an AML foundation, shut down its Estonia operation, and brought in a newer and more international management than Swedbank has done, including on the compliance side. Swedbank, on the other hand, was slow to face up to similar problems in its Baltic network – even after the Danske Estonia scandal exploded.

Blame The upside of this for the regulator and the bank is that it has been easier to shift blame – in the regulator’s case onto the bank, and in the bank’s case onto its former management. The Swedish supervisor criticised Swedbank for withholding information almost as much as its failures to address the actual risks.

After the release of the Clifford Chance report, Göran Persson, Swedbank’s chairman, told journalists that its management’s lack of truthfulness in late 2018 was “a decisive mistake”. Partly as result, the board has cancelled the severance pay of Birgitte Bonnesen, who served as CEO until last March. By contrast, the Danish supervisor stopped short of acting against Danske’s management in a May 2018 inquiry, months before its CEO Thomas Borgen was forced to step down in light of an independent investigation. Coupled with the lack of a subsequent fine from the Danish supervisor, this has left questions about Denmark’s oversight that could be a longer-lasting sore for the country, and by extension for Danske.

Source: Euromoney

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