ANALYSIS: "Threat of US billion-dollar fine only cure for Swedish naivety"

How could the people's bank end up in this situation, asks UG reporter Joachim Dyfvermark, CEO of Swedbank Jens Henriksson. His answer, "Swedish naivety", certainly touches on some Swedes' self-image. Greed and lack of corporate governance are an alternative answer that may be more difficult to acknowledge.

Swedbank would like to turn pages but with a CEO who was also CEO of Swedbank's main owner Folksam during the years 2013-2019, Jens Henriksson has had more transparency than most in Swedbank. Also, the transparency of the issue is whether the bank is merely a passive victim or whether the bank has had a pronounced strategy to attract shady customers. As the representative of the Baltic countries in the IMF during the financial crisis, he should be able to report on the risks of running a bank in the Baltic countries.

When Danske Bank tried to clean houses in the Baltic countries in 2014-15 and clean away unwanted customers, it is obvious that Swedbank opened its arms. Then money flowed into Swedbank from Danske Bank from high-risk customers who were not resident in the Baltic countries.

As a regular bank customer in Sweden, you must carefully fill out a form about where the money comes from and the purpose of the deposit it is about. But when SEK 10 million is to be transferred from a Russian sanctioned arms company via the British Virgin Islands to its US counterpart, absolutely nothing happens.

It can be said time and time again: Being a bank is about being in the trust industry. A society needs banks and a society needs stable banks. As a bank customer you must be able to trust your bank.

But obviously Swedbank is unable to keep a clean house themselves. First, the Balts were flooded with both housing and consumer loans. During the financial crisis, the Swedish state provided guarantees. Although easy to forget, Swedbank in particular was bad looking. When the gold rush erupted after the financial crisis, new sources of income were sought.

Earlier this year, Assignment Review was able to show that one of Swedbank's largest corporate customers in Estonia, Carbo One, has ties to oligarch Iskander Makhmudov. According to Estonian Posttimes, the bank chose to retain him as a customer in 2009 when other customers were evicted.

Now, Assignment Review has further highlighted the relationship between Swedbank and Makhmudov - something that has given the US authorities reason to investigate Swedbank for participation in criminal sanctions. It is not in the same order of magnitude as the French major bank BNP Paribas or Turkish Halkbank. But regardless of location, there is no club you want to be a member of.

The Swedish Financial Supervisory Authority is obviously not frightening enough, nor does it have the muscles needed to manage Swedish banks' risk-taking in the Baltic countries. And Estonia's Financial Supervision Authority can currently fine the Swedish banks with a meager maximum fine of the equivalent of SEK 4 million. The American authorities have the greater reach and impact the better and the worse.

"In Sweden, this money laundering problem has not really been taken seriously, and we have then been exploited," says Swedbank's CEO Jens Henriksson.

Central to succeeding in combating money laundering as a bank is customer awareness. Both before and after transactions. Iskander Makhmudov is one of Russia's most notorious oligarchs. According to Swedbank's own investigations, this type of high-risk customers who are not resident in Estonia has the equivalent of SEK 1,400 billion.

That it can create problems for a bank should not come as a surprise. Swedbank would like to turn pages and say that they are a new kind of bank, but it will take time to regain customer confidence.