Friday, 29 March 2019

Scandinavian Banks’ New Era of Scandal

On the back of revelations regarding Danske Bank and its connection to money laundering last year, it was revealed in the news yesterday that Birgitte Bonnesen, the CEO of Swedbank, had been relieved of her duties just minutes into the Bank’s AGM in relation to the organisation’s connection to dirty money. In this post we shall examine these connected cases further and learn more about the anti-money laundering issues facing banking organisations.

The incredibly reputable Danske Bank, Denmark’s largest lender, became embroiled in a money laundering scandal last year when it was revealed they had helped launder almost €200 billion in Russian and Baltic money since 2007. The case of Danske Bank revolves around the purchasing of an Estonian Bank that would become the vessel for money laundering from neighbouring States like Russia and the Baltic States. The leadership of Danske Bank were not only made aware of the issues as early as 2010, but actively promoted the increasing of ‘non-resident business’ i.e. money from non-Estonian Nationals up to a point when, in 2011, the Estonian Bank generated 11% of Danske’s total profits, despite only accounting for 0.5% of the bank’s total assets. There were a number of associated issues, like the bank having nobody in place as a compliance officer for anti-money laundering (flouting specific Danish laws in the process) and in 2014 a whistleblower brought to the attention of the Estonian bank’s leadership the fact that British LLPs (Limited Liability Partnerships) were being used to funnel money from people closely linked to Vladimir Putin and the Russian Intelligence Services. In 2015 the Bank closed its non-resident business in Estonia but they had not gotten away with their crimes, with Estonian prosecutors arresting 10 people in connection with the investigation and with Deutsche Bank’s American subsidiary being dragged into the mire for good measure.

The once reputable Scandinavian sector took a massive hit over Danske and today Swedbank looks set to add to this degeneration in standards. The bank was raided this week by Swedish authorities looking for evidence of fraud and insider trading, whilst the US is currently probing Swedbank for its role in the Danske Bank scandal. The rumour is that Swedbank handled more than €135 billion in assets from ‘high risk clients’ and that the bank’s connection to Danske, and interesting Mossack Fonseca, is the cause for the probe. The Swedish Prime Minister – Stefan Lofven – stated that ‘this is absolutely unacceptable’ because scandals such as these ‘destroys confidence in the financial system which is important for society’. It is interesting to note that, even in Scandinavia where societal issues are, by and large, given much more reverence than in Europe and the US, the plague of transgressive finance has still managed to take a foothold. With Swedbank being potentially implicated in the Donald Trump affair – there is a suggestion that the bank handled payments from Ukraine to Trump’s campaign manager Paul Monafort – it is likely that this is just the start of a very long and very painful road for the bank, and most likely the Swedish financial system.


Keywords – Banking, Swedbank, Danske Bank, Money Laundering, @finregmatters

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