Banks, EU – Baltic States, Financial Services

The bank will therefore be making a report to the U.S. Treasury’s Office of Foreign Assets Control (OFAC). 

On behalf of the Board of Swedbank, the law firm Clifford Chance has been conducting an investigation since February 2019, which includes clients, transactions and activities from 2007 to March 2019 and how the bank has handled internal and external disclosures. Clifford Chance is also examining how Swedbank has responded historically to identified AML and sanctions controls shortcomings.

In this work Clifford Chance examined all the USD denominated transactions from the three Baltic subsidiaries in Estonia, Latvia, and Lithuania, processed through the U.S financial system during the period March 22, 2014 through March 22, 2019. 

Clifford Chance has found 586 transactions amounting to approximately USD 4.8 mln which constitute potential OFAC violations, 95% of which were processed by the Bank in the period 2015 – 2016. 508 transactions constitute salary payments and payments associated with the operation of a vessel whose owner and operator are located in Crimea and used Swedbank in the Baltics. Crimea is subject to broad U.S. economic sanctions.

''I have been clear regarding the fact that Clifford Chance is to report any

suspected sanction breaches that they may have come across in the investigation. This has now occurred. We are now immediately proceeding with a self-report to  OFAC. This shows that the bank’s process for Know Your Customer, transaction monitoring and internal governance and control have had shortcomings. At the same time, it is some relief that it regards a relatively low amount and transactions such as salary payments, says Jens Henriksson, President and CEO of Swedbank. 

Extensive work has been ongoing to remedy shortcomings in the bank’s work against money laundering and other financial crimes. At the end of January this year, the bank’s action program included 152 initiatives. Further measures to prevent sanction breaches are implemented as part of the program, the bank points out.

Swedbank is reporting the suspected transactions to OFAC. It is now a matter for the U.S. authority to decide how to proceed with the case, and potential consequences. Swedbank says it will cooperate fully with OFAC to resolve the matter.