Financial Crime World

Swedbank and SEB: Sweden’s Largest Money-Laundering Scandals and the Response

Sweden’s Financial Sector Under Scrutiny for Money Laundering and Terrorist Financing

Amid growing concerns over money laundering and terrorist financing, Sweden’s financial sector faces increased scrutiny. Without a national Anti-Money Laundering/Combating the Financing of Terrorism (AML/CTF) mechanism, Sweden is taking measures to bolster its defenses against financial crimes.

Swedish Financial Sector’s Vulnerability to Money Laundering and Terrorist Financing

Sweden’s financial sector has drawn criticism for its vulnerability to money laundering and terrorist financing. The 2017 Mutual Assessment Report by the Financial Action Task Force (FATF) commended Sweden’s overall regime but acknowledged the need for a more comprehensive understanding of risks and challenges.

Swedbank: Sweden’s Most Significant Money-Laundering Scandal

Swedbank, at the heart of Sweden’s most significant scandal, admitted to a weak AML system that failed to prevent illegal transactions, resulting in a fine of over $400 million in March 2020. Since then, the bank has been collaborating with law enforcement and other banks to combat financial criminal activities.

  • Weak AML System
  • Illegal Transactions
  • Fine of over $400 million
  • Collaboration with law enforcement and other banks

Senior Management’s Failure to Establish Adequate Limits

An audit by a law firm at Swedbank revealed senior management’s failure to establish adequate limits to prevent money laundering between 2007 and 2019.

SEB: Allegations of Money Laundering through Baltic Branches

SEB, another major player, faced allegations that more than 45 million Euros were laundered through its Baltic branches by companies linked to Russian money laundering.

  • Approximately 25 SEB customers conducted transactions with 18 legal entities linked to the Magnitsky incident
  • Approximately 90 individuals and institutions associated with money laundering cases were customers of SEB or had carried out any SEB transactions

Over 200 Billion euros of ‘Suspect’ Transactions

SEB’s report in October 2018 stated that over 200 billion euros of transactions belonging to the bank between 2007 and 2015 were classified as ‘suspect.’ However, their statement that most transactions involved local customers and would not significantly impact the international process raised doubts.

Sweden’s AML Laws and Regulatory Authorities

Sweden has two primary AML laws:

  1. The Swedish Money Laundering and Financing of Terrorism Act (Anti Money Laundering Act)
  2. The Money Laundering Crimes Penal Code

These mandate that all entities subject to the law must establish an AML compliance program and adopt a risk-based approach.

The Swedish Financial Supervisory Authority (SFSA)

The Swedish Financial Supervisory Authority (SFSA) plays a crucial role in regulating Sweden’s financial sector, with the primary objective of increasing efficiency and protecting consumer rights. As an agency under the Ministry of Finance, the SFSA is responsible for authorizing, monitoring, and supervising all financial companies in Sweden.

Preventing Money Laundering in Sweden

Preventing money laundering in Sweden starts with knowing your customer and establishing an environment for customer due diligence. Before opening a customer account, it is necessary to obtain and evaluate their information, creating a risk profile and taking necessary precautions against possible money laundering risks.

High-Risk Country for Money Laundering and Terrorist Financing

Sweden is identified as a high-risk country for money laundering and terrorist financing, and the lack of adequate AML systems encourages businesses to take stricter measures.

Businesses’ Responsibilities to Combat Money Laundering

Businesses must establish their AML policies and comply with regulations. Sanction Scanner offers solutions to help businesses adhere to their AML obligations, simplifying operations like Know Your Customer, Customer Due Diligence, Transaction Monitoring, and risk management.