Swedbank on March 11 announced the disclosure of approximately $4.8 million worth of transactions that might be subject to U.S. sanctions to the Treasury Department’s Office of Foreign Assets Control (OFAC).
The transactions were discovered as part of an anti-money laundering probe by the law firm Clifford Chance that was commissioned by Swedbank’s board. Swedbank said it is voluntarily reporting the transactions to OFAC.
“It is now a matter for the U.S. authority to decide how to proceed with the case, and potential consequences,” Swedbank stated. “The bank will cooperate fully with OFAC to resolve the matter.”
The investigation, conducted by Clifford Chance beginning in February 2019, reviewed transactions and activities from 2007 to March 2019 and how Swedbank has handled internal and external disclosures. During the probe, the law firm examined transactions denominated in U.S. dollars from the bank’s three Baltic subsidiaries in Estonia, Latvia, and Lithuania that were processed through the U.S. financial system from March 22, 2014, and March 22, 2019—the period covered by applicable statute of limitations.
In that span, Clifford Chance found 586 transactions amounting to the approximately $4.8 million potentially subject to OFAC violations, 95 percent of which were processed by Swedbank from 2015-16. Of those transactions, 508 were payments associated with the operation of a vessel whose owner and operator are based in Crimea, which is subject to broad U.S. sanctions.
“This shows that the bank’s process for Know Your Customer (KYC), transaction monitoring and internal governance and control have had shortcomings,” said Swedbank President and CEO Jens Henriksson in a press release. “At the same time, it is some relief that it regards a relatively low amount and transactions such as salary payments.”
Swedbank has previously owned up to weaknesses in the areas of anti-money laundering and KYC.
“The bank’s anti-money laundering work has had, and still has, certain shortcomings,” Swedbank said in a September 2019 press release. “In the past, the bank has not allocated sufficient resources and competence to adequately manage the risk of money laundering by clients and third parties. The division of responsibilities within the bank has not been clear enough, and the bank has not always complied with internal policies.
“… Based on these insights, Swedbank is currently hard at work to ensure regulatory compliance going forward.”