How Good Governance Could Have Avoided Swedbank’s AML Failings

Updated: Apr 14, 2020

The international law firm Clifford Chance has revealed in a recent report fundamental Anti-Money Laundering (AML) failings by Swedbank in its Baltic subsidiaries. The report published on 23rd March 2020, was mandated by the Swedish bank in response to allegations that it handled $155 Billion in suspicious transactions pertaining to foreign based customers who had previously been offboarded by other financial institutions, using local Baltic subsidiaries of the bank. [1]

Failings Highlighted In the Report?

  • High-risk customers were on-boarded without obtaining the required documentation regarding ultimate beneficial owners (UBO’s), such as, proof of source of funds, legitimate reasoning for the account being set up;

  • Swedbank failed to identify complex ownership and identify ownership structures through tax havens and other known jurisdictions which do not have strong transparency laws;[2]

  • Senior management failed to establish clear and coherent AML policies and procedures within the Bank. There was a systemic lack of understanding pertaining to the risk posed by high risk, non-resident customers to the bank; and

  • Finally, such red flags were raised and never addressed, allowing an environment conducive to money laundering.[3]