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US regulators are probing Swedbank over a series of money-laundering scandals in a dramatic escalation of the Swedish bank’s dirty-money problems.
The New York State Department of Financial Services wrote to Swedbank last month saying it was looking into seven separate matters involving the Swedish bank, according to a copy of the letter seen by the Financial Times.
News of the letter came on the same day that Swedish prosecutors raided Swedbank and only hours after it emerged that it handled €135bn of money from high-risk non-residents, mostly Russians, through its Estonian operation over the past decade.
The DFS letter, dated February 20, stated that New York was “currently undertaking several inquiries” related to Swedbank and its relationship to various other money-laundering scandals. These involve lenders such as Danske Bank, Latvia’s ABLV, Cyprus’s FBME and Lithuania’s Ukio, as well as Mossack Fonseca, the law firm at the heart of the Panama Papers.
The letter marks the first sign of interest by a US regulator in Swedbank’s actions following the announcement last month of a joint Swedish and Estonian supervisory probe into the largest bank in the Baltics.
The letter appears to have been sparked by the DFS’s dissatisfaction with Swedbank’s responses to a previous enquiry on its links to Mossack Fonseca.
“From our review of the production it appears that this response may be incomplete, as it does not appear to apply to ‘the global operations of Swedbank,’ and instead excludes responsive information relating to parents, subsidiaries or other affiliates of Swedbank,” stated the letter, signed by DFS’s deputy superintendent for enforcement Megan Prendergast Millard.
New York’s DFS declined to comment on the letter. Swedbank said it was restricted by law to not commenting on communications with the DFS. But it added: “Swedbank co-operates fully and communicates clearly, truthfully and with good faith with all relevant authorities.”
The rapidly-expanding Swedbank scandal is only the latest in a series of dirty-money sagas ripping through Nordic banking. The US Department of Justice and Securities and Exchange Commission have already started investigations into Denmark’s Danske Bank while both Swedbank and Denmark’s Nordea are facing criminal complaints in the Nordic region over alleged money laundering.
The scandals at the three Scandinavian lenders amount to what could be the largest money-laundering operation in history, painting a picture of wealthy Russians and oligarchs from ex-Soviet states using the Baltic outposts of well-known Nordic banks to move hundreds of billions into the western banking system over the course of a decade.
The Swedish Economic Crime Authority said on Wednesday it had begun a raid in connection with a probe into whether Swedbank broke insider information rules by disclosing to its largest shareholders in February that a television programme on money-laundering allegations against the bank was about to be broadcast.
Swedbank’s shares, already under pressure following a series of revelations about possible money laundering, were down more than 10 per cent at a new five-year low of SKr157.10 on Wednesday.
Prosecutors told the Financial Times they hoped to provide more information, including whether the investigation could be widened, later in the day when the raid was concluded.
Swedbank confirmed it had been raided in connection with an insider information investigation. “At this point of time, no individual or legal entity has been served suspicion of a crime,” it said, adding that it would co-operate with the authorities.
Swedbank is facing several new allegations including that it had misled US regulators and that it handled payments that found their way from the former Ukrainian president Viktor Yanukovich to Donald Trump’s ex-campaign manager Paul Manafort.
Swedish state broadcaster SVT said that Swedbank had told New York’s DFS in 2016 when asked what links it had to Mossack Fonseca that it had only identified customers in Sweden and Norway with such links and did not suspect any money laundering.
But SVT claimed that leaked documents showed more than 100 companies with links to Mossack Fonseca did business through Swedbank in the Baltics.
SVT also alleged that Vega Holding, a company linked to Mr Yanukovich that had an account with Swedbank, sent $25m to Inlord Sales, a shell company registered as a UK limited liability partnership.
Inlord reportedly then sent $999,987 in 2012 to Mr Manafort. Swedbank declined to comment on the allegation, citing bank secrecy on the identity of its customers. Vega and Inlord could not immediately be reached for comment.
The latest revelations came on top of SVT publishing extracts from an internal investigation at Swedbank that showed €135bn of money from high-risk non-residents, mostly Russians, passed through the bank in Estonia between 2008 and 2018.
That compares with €200bn of non-resident money that flowed through Danske Bank between 2007 and 2015, a scandal that led to the Danish lender’s shares halving in value last year.
