Nordea CEO Says Laundromat ‘Witch Hunt’ Shouldn't Target Banks

(Bloomberg) -- As Europe wonders how best to fight money laundering, the chief executive officer of Nordea Bank Abp says it’s wrong to heap blame on the finance industry alone, and warned against starting a “witch hunt” that targets banks.

Casper von Koskull says banks don’t need more responsibilities beyond those they already have to tackle suspicious transactions. “We are not a sheriff and we shouldn’t be,” he said in an interview in Helsinki on Wednesday.

The message from the top executive at the biggest Nordic lender is that Europe can’t expect banks to police money launderers on their own. If the bloc is to tackle the spread of dirty money stemming from crimes, then it needs to “start talking about it in real terms -- what it is and what it isn’t,” von Koskull said. To focus only on banks would be to “trivialize” the issue, he said.

“If we actually start understanding the complexity, it’s not a bank issue, it’s a society issue and you need much closer cooperation between banks, authorities, the police and maybe other bodies as well,” von Koskull said.

Elephant in the Room

Money laundering has become the elephant in the room in Nordic banking, raising questions about an industry that has otherwise stood out for its impressive capital ratios and stable home markets. Since Danske Bank A/S’s spectacular admission last month that much of about $230 billion that flowed through a tiny Estonian unit may need to be treated as suspicious, investors have wondered how widespread such transactions are.

Nordea was recently accused by Hermitage Capital CEO Bill Browder of having been used to launder more than $400 million in a case allegedly linked to the Danske scandal. Von Koskull said Nordea has stepped up efforts to fight laundering through a system of rigorous compliance checks and controls led by a department of about 1,500 people. But the issue, as von Koskull sees it, is that it’s hard to keep up with the perpetrators of laundering and other illicit transactions.

“If you talk about crime, they tend to be a few steps ahead,” he said.

Nordea, like Danske, says it’s cooperating with the relevant authorities, including in the U.S., to help investigate potentially illicit flows. Nordea was fined by Sweden’s financial regulator in 2015 for failing to live up to anti-money laundering standards. It also appeared prominently in the Panama Papers for its alleged role in helping rich clients avoid their tax obligations.

Public indignation over money laundering and similar crimes has swelled amid revelations that several of Europe’s biggest banks have been tainted by scandal. Deutsche Bank AG, ING Groep NV, HSBC Group and BNP Paribas SA are among financial giants to have paid hefty fines for their roles in allowing illicit transactions to go through their firms.

Sweden’s acting financial markets minister, Per Bolund, warned that banks that fail to catch and stop such crimes now face a much tougher regulatory environment.

The financial regulator “has earlier taken action against Swedish banks and given them sanctions,” he told reporters on Thursday. “Now we have also raised sanction levels considerably, so the banks that don’t handle these issues well in the future will be taking very big economic risks.”