October 4, 2018 / 9:25 AM / a year ago

Swedbank says its anti-money laundering procedures not being investigated

STOCKHOLM (Reuters) - Sweden’s Swedbank (SWEDa.ST) said on Thursday that there were no ongoing investigations into its anti-money laundering procedures, a day after its shares slumped on worries about cross-border transactions by banks in Estonia.

FILE PHOTO: Swedbank's logo is pictured on its Lithuanian headquarters in Vilnius, Lithuania, in this May 10, 2014 file photo. REUTERS/Ints Kalnins/Files

On Thursday, Danske Bank (DANSKE.CO) said it was being investigated by the U.S. Department of Justice about non-resident accounts at its Estonian branch, the latest blow in a long-running scandal over lax money laundering controls at its local subsidiary.

“There are currently no ongoing investigations intoour bank from any of our regulators concerning anti-money laundering practices,” Swedbank said in a statement.

“We have always had zero tolerance against money laundering in all markets where we operate.”

Shares in Swedbank, the biggest lender in the Baltics, were hit on Wednesday after Bloomberg published data from Estonia’s central bank which suggested the scale of money laundering activities through Estonia may have been larger then previously thought.

Shares in Swedbank were down 1.4 percent on Thursday. Danske Bank shares were down 3.3 percent.

Sweden’s Financial Supervisory Authority, which regulates Swedbank, said Swedish banks’ activities in the Baltics were mainly directed toward domestic customers. Non-residential accounts which are the focus of money laundering concerns at Danske’s Estonia branch.

“We judge, therefore, that the risks for serious money laundering issues are relatively limited,” spokeswoman Victoria Ericsson said in an emailed comment.

Swedbank said non-resident customers made up less than 1.5 percent of all its clients in the Baltic region.

Figures reflecting the possible scale of money laundering through Estonia have been emerging gradually over the last few months.

In May, data from Estonia’s Financial Intelligence Unit (FIU) showed that more than $13 billion had been laundered through banks in the country from 2012 to 2016, with at least $7.3 billion of that going through non-resident bank accounts.

On Wednesday, data from the central bank showed that between 2008 and 2017, cross-border transactions totaled 1.1 trillion euros ($1.27 trillion). The number includes all flows, including resident and non-resident transactions, a spokesman said.

Estonia’s entire economic output came to about $25 billion last year.

Reporting by Simon Johnson; editing by Jason Neely

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