The chief executive of Swedbank said he hoped the oldest lender in Sweden was at “the beginning of the end” of its damaging money-laundering scandal as he laid out “a big hairy goal” to become the industry leader in fighting financial crime.
Jens Henriksson told the Financial Times that after a record fine in Sweden for poor controls, the bank was now waiting to hear whether US regulators would punish it too.
A damning report from law firm Clifford Chance published in March showed that Swedbank carried out €37bn of transactions with a high risk for money laundering between 2014 and 2019. Commissioned by Swedbank, the report revealed that the bank had actively targeted high-risk individuals in the Baltic region.
Last year the Financial Times reported that the New York State Department of Financial Services was investigating seven separate matters involving Swedbank, particularly its connections to other money-laundering scandals including a high-profile €200bn dirty money case at Danske Bank, Denmark’s biggest lender. In March Swedbank told US authorities that it had found $4.8m of transactions that could have broken US sanctions, often a trigger for substantial fines.
“We are not at the end, but we are hopefully at the beginning of the end,” said Mr Henriksson, drafted in as chief executive last October by former Swedish prime minister Goran Persson, who now chairs Swedbank.
The bank’s new chief executive was blunt about Swedbank’s historic failings.
“Swedbank let suspected money launderers use it. We need to be better. We weren’t good enough,” he said. It was one of the “worst bits of business ever”, he added, as the SKr1bn ($101m) in profits the bank made from its non-resident business in the Baltics had already been dwarfed by a SKr4bn fine and SKr2.7bn spent on investigations. “The obvious lesson is: be compliant,” he said.
Swedbank ousted both its chief executive and chairman last year as its shares fell by more than a third because of the scandal. However, investors remain most worried about US regulators, who have the power to impose multibillion-dollar fines if they find wrongdoing.
Asked how long it could take for US authorities, Mr Henriksson replied: “The timeline is up to them. In principle, it’s easy how you deal with authorities — they decide. You try to be as open and transparent in your dealings.”
Having commissioned the 218-page report by Clifford Chance, the bank was now looking to move on, the 53-year-old CEO insisted.
“Let’s look forward at 2025,” he said. “We have a comprehensive plan to close the gaps [in anti-money laundering controls] by year-end. Then looking ahead: let’s be industry leader in anti-money laundering.”
He called it “a big hairy goal” for the bank to have as it “closes up the history”.
The coronavirus pandemic was making improving some compliance issues “tricky”, according to Mr Henriksson. Swedbank is working on 217 different initiatives to improve its ability to fight against financial crime and 12-15 of them are “red”, meaning they will not be finished in the current quarter.
“We will never be able to stop all money laundering. The criminals are too smart. So how do we solve this for the future?” asked Swedbank’s chief executive, who previously headed the insurer Folksam, one of the bank’s biggest shareholders.
“By everybody in the bank talking and thinking about this. This is something that will be with the bank forever. It should be part of our DNA, fighting against money laundering,” he said.
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