Swedish watchdog to decide whether to fine SEB in money laundering probe

FILE PHOTO: SEB bank sign is seen on the bank's building in Tallinn, Estonia December 1, 2019. REUTERS/Ints Kalnins

STOCKHOLM (Reuters) - Sweden's financial watchdog said on Wednesday it had to decide whether to fine SEB SEBa.ST, which is the subject of an anti-money laundering investigation related to the lender's Baltic operations.

The escalating investigation could drag SEB, whose shares were down 3.2% by 0935 GMT, deeper into a Baltic money laundering scandal which has hammered the share prices of rival Swedbank SWEDa.ST and Denmark's Danske Bank DANSKE.CO.

Sweden’s financial supervisory authority (FI) said it had observed “deficiencies and weaknesses” at SEB and must now decide whether to impose a financial penalty on the bank. The FI said it expected to announce the outcome of its SEB probe in April.

SEB said the regulator had said it was “initiating a sanction evaluation process regarding SEB AB’s internal control and governance of its subsidiary banks in the Baltics.”

SEB spokesman Frank Hojem said the bank had yet to receive feedback from the watchdog, “so we don’t know what they’re basing this evaluation on.”

The bank first indicated it was becoming embroiled in the money laundering saga on Nov. 15, when it said Swedish Television (SVT) would feature the lender in an upcoming investigative documentary on the issue. SEB shares fell 13%.

The FI said it was working with authorities in Estonia, Latvia and Lithuania as part of its investigation into SEB.

Reporting by Colm Fulton; Editing by Terje Solsvik and Edmund Blair