Regulator warns of "panic risk" caused by money laundering scandals


(More Bank) – Once considered the safest of all, Nordic banks are now navigating a world dominated by money laundering claims.

Danske Bank A / S, Swedbank AB and Nordea Bank Abp, often via their operations in the Baltic, have all been sullied by claims that they have manipulated large sums of money associated with crime. But the big risk now lies in the reaction, according to the head of the Finnish Financial Supervisory Authority, which oversees Nordea.

"This discussion on money laundering is very close to panic and it is very dangerous," said Anneli Tuominen, general manager of the FSA in Helsinki, during an interview.

Danske, including the $ 230 billion Estonian money laundering scandal, denies accusations against other banks, reacts by withdrawing from the entire Baltic region and Russia. Nordea makes a partial retirement. Estonia's financial supervision has already expressed its concern about the possible departure of Swedish banks, although Swedbank, which dominates the Baltic states, says it remains attached to the region.

"It would be the worst end result of this discussion if the banks suddenly started withdrawing money from certain markets," Tuominen said. The lesson should not be to evacuate, but to "learn and do better," which is also true for regulators, she said.

Nordic banks underlie the entire financial system of the Baltic region. When Latvia, Lithuania and Estonia went through an economic crisis in 2009, the actions of the Swedish krona and Swedish banks showed the most obvious signs of market distress. Nordic lenders stuck in the Baltic region during the crisis then benefited from the economic rebound that followed.

The three Baltic countries, once forced into the Soviet empire, are now members of the euro zone. But their proximity to Russia seems to have made it a first point of entry for money launderers wanting access to the West, according to Bill Browder, co-founder of Hermitage Capital Management, which started criminal proceedings against Danske. , Swedbank and Nordea.

Tuominen, the only Nordic supervisor operating in the euro area, wants the EU to create a body that oversees banks, using national supervisory mechanisms. She also highlighted the additional funds that banks now devote to compliance in response to allegations dating back more than a decade, in some cases.

Since the start of the money laundering crisis, it was clear that "we need an independent supervisory authority throughout the European Union," she said. It must be tough and intrusive, have a high level of integrity and work "hand-in-hand" from national authorities and countries, she said.

The money laundering scandal has affected not only Nordic and Baltic banks, but also their regulators. The financial supervisory authorities of Denmark and Estonia are both conducting investigations at the European Banking Authority to determine whether they should have taken further steps to prevent the Danske scandal. In Sweden, the head of the FSA has withdrawn from the file due to a potential conflict of interest, due to his relations with a board member of Swedbank.

Banks with the worst exodus of investors are Danske and Swedbank. The largest lender in Denmark has lost almost half of its market value in the past year. Swedbank lost nearly 20% after the Swedish media published a report last month claiming to have handled nearly $ 6 billion of dirty funds related to Danske scandal.

Tuominen says banks can no longer risk being neglected and must take compliance seriously.

"As we have seen, if you do not do this, the price of your stock goes down, you get fired, your bank loses its license," she said. "There is no way out, we must be able to block this criminal use of the banking system."

–With Niklas Magnusson, Frances Schwartzkopff and Ott Ummelas.

To contact the journalists on this story: Kati Pohjanpalo in Helsinki at kpohjanpalo@More, Nicholas Comfort in Frankfurt at ncomfort1@More

To contact the editor responsible for this story: Tasneem Hanfi Brögger at tbrogger@More

For more articles like this, go to More

© 2019 More Bank L.P.