March 11, 2020 / 9:41 AM / a month ago

UPDATE 2-Swedbank says $4.8 mln of payments may have violated U.S. sanctions

(Adds analysts, details)

By Colm Fulton and Johan Ahlander

STOCKHOLM, March 11 (Reuters) - Swedbank said on Wednesday an investigation of its anti-money laundering practices by law firm Clifford Chance had found that transactions totalling around $4.8 million potentially violated U.S. sanctions.

The Swedish lender said it would report the findings to the U.S Treasury's Office of Foreign Assets Control (OFAC) and that it would cooperate fully to resolve the matter.

"This shows that the bank's process for Know Your Customer, transaction monitoring and internal governance and control have had shortcomings," Swedbank CEO Jens Henriksson said in a statement.

Swedbank is under investigation from authorities in the United States, Sweden and Estonia for its role in a wider Baltic money laundering scandal. The outcome of the Swedish case, including any fines, will be announced later this month, according to the Swedish financial watchdog.

Swedbank said Clifford Chance had looked at activity from 2007 to March 2019 but particularly at dollar denominated transactions processed through the U.S. financial system during the five-year period from March 22, 2014 given the applicable statute of limitations.

The bank said the law firm found 586 transactions during the period which could lead to potential OFAC violations, 95% of which it processed between 2015 and 2016.

508 of these transactions were either salary payments or payments associated with the operation of a vessel whose owner was located in Crimea, an area subject to U.S. sanctions, the bank said.

"At the same time, it is some relief that it regards a relatively low amount and transactions such as salary payments," Henriksson added.

Anders Haulund Vollesen, a banking analyst at Jyske Bank, said the relatively low amount involved and Swedbank's cooperation were two alleviating factors.

"Nonetheless, when you process money for people and countries on the sanction list and don't catch that, that's a serious breach and is a serious offence," he said.

Shares in Swedbank were 4% higher at 0922 GMT, slighly outperming the European banking index.

Swedbank is alleged to have processed suspect gross transactions of up to 20 billion euros ($22 billion) a year from mostly Russian non-residents through Estonia from 2010 to 2016. (Reporting by Colm Fulton and Johan Ahlander, additional reporting by Johannes Hellstrom, editing by Louise Heavens, Kirsten Donovan)

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