Swedbank Laundering Case Grows as $10 Billion Found in Review

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Sweden’s oldest bank may have handled considerably more in suspicious transactions tied to an Estonian money laundering scandal than first reported.

Swedbank Remains in Limbo as ’Dirty Money’ Claims Rise: BI React

Swedbank AB, which dominates financial markets in the Baltic region, allegedly let about 95 billion kronor ($10.2 billion) in questionable flows move through its accounts between 2007 and 2015, according to Sweden’s main television broadcaster, SVT, which cited a 2018 internal review by the bank.

The amount is more than double that reported by SVT less than a month ago. The timing of the review also raises questions about Chief Executive Officer Birgitte Bonnesen’s vehement denials late in 2018 that her bank had anything to hide.

Swedbank shares fell as much as 2.6 percent on Friday, bringing losses since allegations first surfaced in February to about 17 percent.

It’s not the first time that a money laundering case targeting a big Nordic bank has grown in scope. Danske Bank, which is being investigated by the U.S. Department of Justice and Securities and Exchange Commission, acknowledged last year that much of about $230 billion that flowed through a tiny Estonian unit was suspicious in origin. That scandal started with reports of just $200 million in questionable flows.

Investigations Into Swedbank

Swedbank is already being investigated by the financial supervisory authorities in Sweden and Estonia. The Swedish FSA has also had to explain the case to U.S. embassy officials in Stockholm. Meanwhile, Hermitage Capital Management has filed a criminal complaint against the bank, alleging it handled money from the tax fraud tied to the death of Sergei Magnitsky. Sweden’s economic crime authority has confirmed it is looking into those allegations.

Read More: Dirty Money Allegations Against Swedbank Trigger U.S. Interest

In a statement to the stock exchange on Friday, Swedbank said it “takes its responsibilities to prevent and detect money laundering very seriously.”

The bank said the figure mentioned in the SVT report represents all transactions between Danske and Swedbank in 2007-2015 that it identified when applying a number of risk indicators. About 2,000 customers were scrutinized more closely, it said. Swedbank says it’s not a given that all the transactions reviewed were suspicious.

"In many cases, there was no need to act further, but in some cases we proceeded with, among other things, reports to the finance police," the bank said.

Swedbank last month hired Forensic Risk Alliance to review SVT’s earlier report, which focused on about 40 billion kronor in questionable flows tied to the Danske case. The result of that probe is due by March 28, to coincide with the bank’s annual general meeting with shareholders.

Calls for Transparency

Alecta, one of Swedbank’s biggest owners, said it expects the lender also to provide the material behind the latest revelations to Forensic Risk Alliance to ensure a thorough review.

“Money laundering is a serious crime, which, if not handled correctly, risks jeopardizing faith in the financial system," said Ramsay Brufer, the head of ownership at Alecta.

SVT says the internal report that found 95 billion kronor in suspicious flows was sent to Bonnesen in September last year, a month before she publicly stated the bank hadn’t found any links to the Danske laundering scandal.

According to Robert Kitt, the CEO of Swedbank’s Estonian unit, there are no signs his employees did anything wrong. He also said that the culture has changed, compared with a decade ago, in terms of what is deemed acceptable conduct at a bank.

“The situation has hugely changed compared with 10 years ago,” he told newspaper Eesti Paevaleht. “The business culture has enormously changed. As late as 2015 the attitude prevailed that using off-shore companies isn’t banned. All that isn’t banned, is allowed. Now there is clearly the mentality that this isn’t accepted.”

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