Swedish bank SEB caught up in international money laundering scandal

Swedish bank SEB has become the latest Nordic bank to be implicated in a massive money laundering scandal, following reports that its Baltic branches handled 45 million euros from companies linked to Russian money laundering.

Swedish bank SEB caught up in international money laundering scandal
SEB, Swedbank and Nordea have all been implicated since the scandal first erupted at Danske Bank. Photo: Janerik Henriksson/TT

An investigation by news agency TT and broadcaster SVT found that 25 SEB clients recorded transactions with 18 corporate entities linked to the so called Magnitsky affair — named after anti-fraud crusader Sergei Magnitsky, who died in Russian custody in 2009 while awaiting trial.

Magnitsky, an accountant, went public with details of an alleged fraud by Russian state officials before being arrested in November 2008 over alleged tax evasion.

A total of 90 companies and individuals, either SEB clients or involved in transactions through SEB, were identified as having links to known money laundering cases.

SEB is the latest Nordic bank to be implicated in the scandal, which started with investigations into Danish Danske Bank's operations in Estonia. Danske, Denmark's largest lender, is the subject of probes in several countries and an independent investigation by law firm Bruun and Hjejle, commissioned by the bank.

That investigation determined that “a large part” of transactions totalling 200 billion euros ($220 billion) between 2007 and 2015 were “suspicious”. When that report was released in October 2018, SEB said it was not likely to be affected, as its operations dealt mostly with local clients, and not international transactions that comprised the bulk of the suspicious transactions.

SEB chief executive Johan Torgeby said at the time that the bank had seen “no red flags” since 2008.

Following questions from media outlets however, on Tuesday SEB published historical data on so-called non-resident — meaning clients based outside Estonia — flows in SEB's Estonian operations between 2005 and 2018.

The transactions amounted to 84.6 billion euros, of which 25.8 billion was linked to what the bank referred to as “low-transparency” customers. No such flows were recorded in 2017 and 2018, and the bank maintained it had not been the victim of extensive money laundering.

“In the comprehensive analysis that we have made of our business in the Baltics, we have not seen that SEB has been used for money laundering in a systematic way,” Torgeby said in a statement.

Since the scandal erupted at Danske Bank, the Swedish bank Swedbank and Finnish Nordea have also been implicated. 

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Brits in EU risk losing UK bank accounts ‘within weeks’

Some of Britain's biggest banks have begun contacting customers in European Union countries, warning them that their accounts will be closed down within weeks because the cost and complexity of operating without a continuation of pan-European banking rules is too much.

Brits in EU risk losing UK bank accounts 'within weeks'
Lloyds Bank expects to close at least 13,000 accounts. Photo: Lloyds Bank
According to a report in The Times, thousands of Britons who live in Europe face being stripped of their UK bank accounts and credit cards, because of the UK government's failure to agree rules for operating after Brexit. 
Each of the EU's 27 member states has different rules for cross-border bank accounts which will start to apply immediately the UK's transition period ends on 31st December 2020. 
“In some cases, continuing to serve customers would be incredibly complex, extremely expensive and very time-consuming, and simply would not make economic sense,” a source at one British bank told the newspaper. “This is passporting — this is the reality of Brexit.”
If a way is not found to continue pan-European banking rules, or passporting, UK banks will br breaking the law if they don't apply for new banking licenses in each European Union Country. 
Lloyds, Britain’s biggest banking group, began writing to customers in August, warning them that their bank accounts would  close down on December 31.
The bank estimates that 13,000 customers, including those based in Holland, Slovakia, Germany, Ireland, Italy and Portugal, would lose their accounts. 
“If customers have regular deposits into, or payments out of, their account, they will need to make other arrangements before their account is closed,” the bank said. 
Barclays and Coutts have also started contacting customers. 
“In light of the UK leaving the EU at the end of 2020, we continue to review the services we offer to customers within the European Economic Area (EEA), and any impacted customers will be contacted directly,” Barclays said in a statement. “The timings for account closure will depend on the type of product that a customer holds, but we will always give notice to customers.”
“In the event that no alternative to the European Economic Area passporting regime for financial services is agreed between the UK and EU, we have taken the difficult decision to withdraw from offering our services to clients who reside in the EEA,” Coutts said.