Anybody wanting a blueprint for how not to handle a money laundering scandal could do worse than look at Swedbank. 

The Swedish bank, the largest lender in the Baltics, is being bombarded with allegations that it handled vast amounts of dirty money. It responded with a hastily commissioned and heavily redacted report last week that its own chief executive admitted “may seem thin”.

“I’m in shock as to how badly they have handled these revelations. There are two options: either they are doing communications in an amateurish way or they’re trying to hide something. Or a mix,” said Torbjorn Hallo, an economist at the Swedish trade union confederation LO.

Swedbank was given a warning last September when Danske Bank, Denmark’s biggest bank, published its own report on how €200bn of so-called non-resident money from Russia and other former Soviet states flowed through its tiny Estonian branch over a nine-year period. 

The Swedish lender looked into its links with Danske and told reporters “there is nothing” because it had found that none of the named customers of the Danish bank were clients of Swedbank. It told the Financial Times in October that it had a “fundamentally different” business model from the “niche operation” of Danske.

But that narrative appears to be unravelling after a series of revelations from Swedish public broadcaster SVT. Investigative reporters at the TV station first claimed $5.8bn and then $10bn of questionable money flowed between Danske and Swedbank customers. 

Swedbank stressed that the sums were gross transaction flows after “a number of risk indicators” were applied. It also cited bank secrecy in not discussing individual customers. 

In response, it ordered a report from external consultants. After replacing auditor EY due to it being probed in Denmark over the Danske scandal, Swedbank gave Forensic Risk Alliance less than a month to produce an initial report. 

The report, released last week, focuses only on the 50 customers named by SVT and is redacted so that it is unclear how many were clients of Swedbank. A second, wider-ranging report is promised but that will not be made public, the bank said. 

Shareholders, anti-money laundering experts and even a Swedish government minister have criticised that approach as too narrow.

“It is insufficient with an internal report from Swedbank to get clarity,” Per Bolund, financial services minister in the centre-left Swedish government, told SVT. “It’s therefore important for the Financial Supervisory Authority and its Baltic counterpart to start their own investigation.”

Sven Stumbauer, a US-based anti-money laundering expert, argued that Swedbank had “cast a very narrow net” and that its board should have ordered a broader investigation.

Swedbank acknowledges some communication lapses. Birgitte Bonnesen, the under-fire chief executive and former head of its Baltic business, said her biggest lesson from the affair had been on communication and the need to provide more context about the bank’s anti-money laundering efforts.

She stressed “that if somebody could think there are no attempts [at money laundering] at Swedbank, that’s not true. It’s been happening for years.” She argued that Swedbank followed the correct procedures by shedding suspicious customers and informing authorities. “There was nothing out of the ordinary. There was nothing that made me concerned,” she said of the bank’s report into Danske. 

Joacim Olsson, chief executive of the Swedish Shareholders’ Association, said “confidence in the bank is being damaged” by its lack of transparency. “We don’t know the extent of suspicious transactions . . . We don’t know if the money laundering controls have been adequate,” he said.

Now the scale of the problem appears to be even greater. A third report, written by a former Norwegian prosecutor for the bank, shows that about €135bn flowed through Swedbank’s “high-risk non-resident portfolio” in Estonia alone over a 10-year period, according to SVT. That compares with €200bn for all of Danske’s non-resident clients in Estonia over nine years. 

The questions are intensifying about what management knew when and why they did not communicate publicly about it. The pressure increased after Swedish prosecutors raided Swedbank to probe whether it tipped off investors ahead of a television programme about money laundering at the bank last month.

While Danske has also been criticised for its response to the scandal, Mr Hallo at the LO trade union confederation said Swedbank should follow the Danish bank’s example and publish a full-blown report into money laundering in its Baltic business.

“Swedbank seems to be the true blueprint in how not to communicate,” he said. “The reasonable thing would be to look into the whole issue — how Swedbank has conducted their affairs in the Baltic region, not just 50 accounts. They will come to the conclusion that they have to do it.”

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