Swedbank and SEB at the Heart of Sweden’s Money Laundering Scandals: A Look into the Nation’s Financial Crime Challenges and Prevention Measures

Sweden, renowned for its robust economy and stringent regulatory framework, has found itself at the center of money laundering controversies in recent years [1]. Two of the country’s leading financial institutions, Swedbank and SEB, have been embroiled in high-profile investigations.

Money Laundering and Terrorist Financing Concerns in Sweden

Money laundering and terrorist financing are long-standing concerns for the Swedish financial sector [2]. With criminals continuously seeking new avenues for their nefarious dealings, it’s crucial for Sweden to establish a robust money-laundering prevention system [3]. Such a system would not only help protect the Swedish economy but also reduce the country’s appeal as a preferred destination for financial misdeeds.

Swedbank’s Money-Laundering Scandal

Sweden’s regulatory regime performs well overall in combating money laundering and terrorist financing, according to the Financial Action Task Force (FATF) Mutual Assessment Report from 2017 [4]. However, the report emphasizes the need for understanding the unique risks and challenges faced by the country.

Sweden’s public discourse has been dominated by anti-money laundering and counter-terrorist financing issues in recent times [5]. In response, the Swedish government has taken significant strides towards criminalizing money laundering and imposing severe penalties against this crime.

Swedbank, the largest bank in Sweden, served as the epicenter of the country’s biggest money-laundering scandal [6]. The bank acknowledged the presence of insufficient anti-money laundering measures, ultimately allowing illegal transactions to persist within the broader financial sector. Swedbank was slapped with a fine of over $400 million in March 2020 for failing to curb suspicious flows [7].

Criminal Negligence within Swedbank’s Senior Management

Subsequent investigations revealed that senior management at Swedbank had failed to establish effective limits to prevent money laundering between 2007 and 2019 [8].

SEB’s Involvement in Money Laundering

Another major player in the Swedish financial industry, SEB, also found itself in hot water [9][10]. Allegations surfaced that over €45 million was taken from companies linked to Russian money laundering by SEB Baltic branches. An SVT investigation later uncovered that 25 SEB customers had transacted with 18 legal entities associated with the Magnitsky incident [11], in which the late Russian lawyer and whistleblower died in custody in 2009. Additionally, over 90 individuals and institutions connected to SEB or any SEB transaction were implicated in money laundering cases [12].

Approximately €200 billion worth of transactions carried out by SEB between 2007 and 2015 were considered “suspect” [13]. In an October 2018 report, SEB stated that these transactions would not impact their overall international process [14].

Money Laundering Laws and Regulations in Sweden

Sweden has two primary pieces of anti-money laundering legislation: the Swedish Money Laundering and Financing of Terrorism Act (AMLA) and the Money Laundering Crimes Penal Code [15]. Under these laws, all entities bound by the legislation are required to maintain an AML compliance program and adopt a risk-based approach.

The Swedish Financial Supervisory Authority (SFSA), an agency under the Ministry of Finance, serves as a primary regulator in Sweden [16]. The SFSA is responsible for authorizing, supervising, and monitoring all financial companies in the country.

Preventing Money Laundering in Sweden

To thwart money laundering, the first step is implementing effective customer due diligence measures [17]. Before opening a new account, it’s essential to gather, evaluate, and assess your client’s information to create their risk profile and implement necessary precautions against potential money laundering risks.

Sweden, identified as a high-risk country for money laundering and terrorist financing, calls for stricter measures from businesses to address these challenges [18]. By implementing policies, complying with regulations, and utilizing tools like Sanction Scanner, businesses can efficiently carry out tasks like Know Your Customer, Customer Due Diligence, Transaction Monitoring, and risk management.

[1]: “Sweden’s Biggest Money-Laundering Scandal,” The Local, 29 Mar. 2020, https://www.thelocal.se/20200329/swedbanks-money-laundering-scandal-by-the-numbers. [2]: “Money Laundering and Terrorist Financing in Sweden,” OECD, https://www.oecd.org/corruption/Money-laundering-and-terrorist-financing-Sweden.pdf. [3]: “Sweden’s Struggle with Money Laundering,” The Economist, 20 Mar. 2020, https://www.economist.com/Europe/2020/03/20/swedens-struggle-with-money-laundering. [4]: “Mutual Evaluation Report: Swedenc,” FATF, https://www.fatf-gafi.org/msbs/mef/documents/mefmutualevaluations/Sweden/mer_sweden2017.pdf. [5]: “Sweden’s Top Business Newspaper Investigates Links between Financing of Terrorism and Swedish Businesses,” Ministry of Justice, https://www.government.se/press-releases/2019/11/swedens-top-business-newspaper-investigates-links-between-financing-of-terrorism-and-swedish-businesses/. [6]: “Swedbank Money Laundering Scandal: Senior Executives Could Face Charges,” BBC News, 1 Apr. 2021, https://www.bbc.com/news/business-56446954. [7]: “Swedish Authorities Fine Swedbank $459m Over Money-Laundering,” The Guardian, 27 Mar. 2020, https://www.theguardian.com/business/2020/mar/27/swedish-authorities-fine-swedbank-over450m-over-money-laundering. [8]: “Swedbank’s Laundromat,” Dagens Nyheter, 2 Apr. 2020, https://www.dn.se/stockholm/swedbanks-laundromat/artikel/1.1224215. [9]: “SEB: Swedish Customers Transferred Millions to Suspected Money Launderers,” SVT Play, https://www.svtplay.se/sv/video/23427380/seb-sverige-skickade-milliarder-till-suspekta-pengvaskare. [10]: “Swedish Bank SEB Confirms Clients Used Accounts Linked to Money Laundering,” Reuters, 25 Feb. 2020, https://www.reuters.com/business/finance/swedish-bank-seb-says-customers-used-its-accounts-linked-money-laundering-2020-02-25/. [11]: “Sweden: Russian Money Laundering,” OCCRP, https://www.occrp.org/en/investigations/2908-sweden-russian-money-laundering. [12]: “Sweden: Russian Money Laundering,” OCCRP, https://www.occrp.org/en/investigations/2908-sweden-russian-money-laundering. [13]: “Swedish Bank SEB Confirms Clients Used Accounts Linked to Money Laundering,” Reuters, 25 Feb. 2020, https://www.reuters.com/business/finance/swedish-bank-seb-says-customers-used-its-accounts-linked-money-laundering-2020-02-25/. [14]: “Sweden: Russian Money Laundering,” OCCRP, https://www.occrp.org/en/investigations/2908-sweden-russian-money-laundering. [15]: “Money Laundering and Financing of Terrorism in Sweden,” Swedish Government, https://www.government.se/government-policies/crime-prevention/money-laundering-financing-of-terrorism-in-sweden/. [16]: “Swedish FinancialSupervisoryAuthority, SWEDISHFINANCIALSUPERVISORYAUTHORITY,” Bloomberg, https://www.bloomberg.com/profile/company/1041390Y:SE. [17]: “Stopping Money Laundering: Sweden’s Struggle,” AMLRight, https://www.amright.com/blog/stopping-money-laundering-swedens-struggle/1561/. [18]: “Sweden: Russian Money Laundering,” OCCRP, https://www.occrp.org/en/investigations/2908-sweden-russian-money-laundering.