In the competition to determine which European bank was responsible for the most egregious money-laundering violations, it's beginning to look like boring old Swedbank, Sweden's oldest lender, has muscled out Deutsche Bank (according to Maxine Waters, the reigning world money laundering champ) and Denmark's Danske Bank to claim the title.
At this point, there aren't many banks in the Nordic countries that haven't been implicated in the massive money laundering scandal led by Danske's (now-shuttered) Estonian branch. By the Danish bank's own admission, more than $230 billion in potentially laundered funds flowed through the branch between 2007 and 2015, a sum that dwarfed the GDP of Estonia.
But thanks to a series of embarrassing investigative reports by Sweden's STV, it appears that not only were Swedbank's AML controls over the past decade-and-a-half virtually nonexistent, but the bank also worked with some of the same clients who have been tied to Danske bank, as well as clients of disgraced Panamanian law firm Mossack Fonseca, which was famously exposed back in 2016 for facilitating international money laundering and tax avoidance on a massive scale, on behalf of its clients, including criminals, businessmen and - crucially - politicians from all over the world.
Given the Nordic peoples' reputation for honesty and openness, one might have expected Swedbank to cooperate with international authorities looking into suspicious transactions. But according to a Wednesday STV report, the bank misled American investigators about transactions tied to the Mossack Fonseca leaks.
According to the report, cited by Reuters and Bloomberg, these included transactions involving Paul Manafort and former Ukrainian President Viktor Yanukovich were among the clients being investigated by the US. Both allegedly received suspicious payments via the Stockholm-based lender, with the cash originating - you guessed it - in Russia and the former Soviet Union.
In a separate scandal, the bank’s headquarters were raided by Sweden’s Economic Crime Authority on Wednesday as part of an investigation into whether the bank broke insider information rules by tipping off its biggest shareholders to the first SVT report on money laundering, per the FT.
SVT reported Tuesday that Swedbank may have handled as much as $20 billion per year tied to the Danske money laundering case. Additionally, it worked with 100 Mossack Fonseca clients, moving billions of dollars on their behalf.
Unsurprisingly, Swedbank shares plunged in local trading on Wednesday, falling as much as 8% at their lows as the revelations stoked fears about the multiple international investigations into the bank's conduct. Since the scandal broke earlier this year, the bank's shares are down more than 20%.
As if the revelations themselves weren't bad enough, the timing of Wednesday's report couldn't be worse for Swedbank shareholders. The bank's annual shareholder meeting is Thursday. CEO Birgitte Bonnesen will likely need to answer some awkward questions. Not unlike former Danske CEO Thomas Borgen, who resigned last year as the scandal snowballed as shareholders accused him of turning a blind eye to the money laundering when he ran Danske's international unit, Bonnesen before becoming CEO ran the bank's audit department before becoming CEO, meaning it will be difficult for her to avoid culpability.
Analysts are already worried that Bonnesen is losing control of the bank, as calls for her to resign grow.
"Our concern is that Swedbank’s management is losing its grip on how to handle what are now snow-balling money-laundering accusations and allegations," said Philip Richards, an analyst at Bloomberg Intelligence.
One thing is for sure: This is far from over.