Bitcoin's Link to Crime Is a Growing Worry, Nordea Bank Warns

(Bloomberg) -- The biggest bank in the Nordic region says this month’s ransomware attack underscores the need for lawmakers to look more closely at bitcoin’s role in financial crime.

Nordea Bank AB, whose chief risk officer, Julie Galbo, testified to the Danish parliament on Tuesday in response to questions about management’s efforts to fight money laundering, says virtual currencies like bitcoin are making that battle harder to win.

“Bitcoin is an unregulated and opaque currency that’s often used in shady transactions,” Galbo told Bloomberg after testifying. She says bitcoin represents a “big risk” standing in the way of efforts to fight money laundering because of the anonymity it affords those who use it.

Nordea has been investigated by authorities in Denmark and Sweden for its failures to comply with anti-money laundering requirements. Last year, it was also responding to inquiries from the U.S. government on alleged breaches of anti-money laundering rules that have already led to fines in Sweden.

The bank, the only global systemically important financial institution in the Nordic region, featured prominently in the Panama Papers for allegedly helping rich clients hide their wealth from tax authorities. Management, led by Chief Executive Officer Casper von Koskull, has tried to address the criticisms, adding hundreds of people to Nordea’s compliance department.

Galbo, who used to work at Denmark’s financial regulator, said “patterns of financial crime change constantly,” making it increasingly difficult for those fighting it to do their jobs. She says working closer with the relevant authorities, including sharing knowledge, would help banks comply with the rules.

Galbo said WannaCry, which affected more than 200,000 computers in at least 150 countries, is a clear example underscoring the need to treat bitcoin with suspicion. The hackers gave those targeted 72 hours to pay $300 in bitcoin. If people refused to pay after seven days, their computers would be permanently locked.

Galbo told lawmakers in the Danish parliament that aside from complying with the law, Nordea is “morally obliged” to do everything in its power to prevent its systems being used in connection with money laundering.

While bitcoin was singled out for criticism, Galbo said the technology behind the payment form -- blockchain -- was something Nordea continues to view “very positively.”

To contact the reporter on this story: Peter Levring in Copenhagen at plevring1@bloomberg.net.

To contact the editors responsible for this story: Jonas Bergman at jbergman@bloomberg.net, Tasneem Hanfi Brögger, Nick Rigillo