When Latvia's financial services authority examined the Swedbank in the spring of 2016, it found extensive deficiencies in the bank's procedures against money laundering and terrorfinansiering.
"We had serious remarks against the significant shortcomings of the bank had to come to grips with," says Ieva Upleja, who is communications director at the Latvian financial supervisory authority, FKTK.
Swedbank is the market leader in all Baltic states and have 34 per cent of deposits from private individuals in Latvia. The control was including the years 2007-2015, then according to the Mandate review was a series of suspicious transactions. The inspectors discovered several violations of the law on money laundering.
been sufficiently attentive to the customers who have made the complexity of financial transactions without any clear purposes. There were deficiencies in the bank's internal control systems and the absence of documents and records that would show that the customers did not engage in suspicious activities.
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the Shortcomings were, according to the FKTK so extensive that the commission had been able to issue fines of ten percent of the bank's net income during the previous year. It never took place. Instead, an agreement was reached with Swedbank, where the bank undertook to correct the errors and pay a small penalty.
In Swedbank's interim report for the fourth quarter of 2016, it is mentioned that the bank paid eur 1.36 million for deficiencies in its internal control systems, processes and documentation in Latvia, which corresponded to 13 million Swedish kronor.
standard when banks will agree with the inspection to improve their control, according to the FKTK. It also took account of the fact that Swedbank at the previous checks showed weaknesses in the work against money laundering.
In the agreement included that the bank would stop offering accounts to people who do not live in Latvia, therefore, the type of foreign accounts which is a major risk factor for money laundering.
– I have checked with my colleagues and they confirm that the measures were completed in early 2018. Now the case is closed, " says communications manager Ieva Upleja.
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To banks in breach of the rules is not uncommon in Latvia, where several local banks lost their licenses in recent years after extensive money laundering.
where the bank has 42 per cent of deposits from private individuals, discovered similar weaknesses, as recently as a year ago.
Which manages the riksbank Lietuvos Bankas, the monitoring of the banking and financial markets. When the controlled Swedbank in the beginning of 2018 were flaws so large that the bank received an official warning. The inspectors discovered no evidence of money laundering, but several deviations from the procedures shall protect the bank against it.
the Shortcomings concerned the procedures for risk assessment and monitoring of the business relationships.
"They made risk assessments, but these need to be improved and in some cases we wanted that they would respond faster," says Vytautas Valvonis who is the head of inspektionsavdelningen on the Lithuanian national bank.
He estimates, nonetheless shortcomings as ”minor”.
– Therefore, they only got a warning, the lowest form of sanction.
for the first quarter of 2018 according to Swedbank that it has taken steps to improve its processes in Lithuania. It is confirmed by the Vytautas Valvonis which says that the bank is 99 per cent has remedied the deficiencies within the time required, but that the inspection continues to keep the bank under surveillance.
In Estonia is Swedbank's dominant with 55% of individuals ' deposits.
the Swedish and the Estonian financial supervisory authorities have declared that they together shall examine the Swedbank after the accusations in Svt Commissions review, and that their counterparts in Latvia and Lithuania have promised to assist them.