Executive Summary

In 2019, investigative reports revealed that Swedbank’s Estonian and Latvian branches processed over €135 billion in suspicious non-resident flows between 2010 and 2016. Internal reports, whistleblower alerts, and external warnings were routinely ignored, and compliance functions lacked the authority and resources to challenge high-risk volumes. As a result, Swedbank faced regulatory penalties, criminal investigations and severe reputational damage.

Background: Swedbank’s Baltic Footprint

Swedbank is one of Sweden’s largest banks, with significant operations in Estonia, Latvia and Lithuania. Much like Danske Bank, Swedbank developed a large portfolio of non-resident customers from Russia, Ukraine, Moldova and other CIS regions. These clients provided high fee revenue but carried substantial AML risk. Over time, the Baltic branches became heavily exposed to high-risk flows and insufficient oversight.

Timeline of Key Events

• 2010–2014: Major growth in non-resident business across Estonia & Latvia.
• 2015–2016: Several internal reviews highlight AML deficiencies; warnings not escalated properly.
• 2017: Swedish FIU receives intelligence indicating suspicious flows linked to Russian laundromat schemes.
• 2018: Swedbank begins internal AML investigations but downplays scale.
• Feb 2019: Swedish TV exposes the scandal with leaked documents (“Uppdrag Granskning”).
• 2019–2020: Massive regulatory actions across Sweden, Estonia & Latvia.

Key AML & Governance Failures

Major Red Flags Swedbank Overlooked

• Shell company accounts with no physical presence or clear purpose.
• Large cross-border transactions inconsistent with stated business activity.
• Links to Russian “Laundromat” schemes, including known high-risk intermediaries.
• Round-tripping patterns between related corporate structures.
• PEP exposure from Eastern European countries.
• Correspondent bank warnings that were ignored.
• Inadequate sanctions screening coverage across Baltic branches.

Regulatory Actions & Consequences

Swedbank faced severe regulatory and operational consequences:

• Fines across Sweden and the Baltics totaling hundreds of millions of euros.
• Criminal investigation by Swedish and Baltic authorities.
• CEO and Chairman forced to resign.
• Major overhauls to AML, sanctions, and risk governance functions.
• Terminated high-risk non-resident business units.
• Long-term reputational loss affecting market valuation.

Lessons for KYC, EDD & AML Professionals

• High-risk non-resident portfolios require strong EDD, monitoring, and governance.
• Correspondent bank alerts should be treated as critical escalations.
• AML warnings must be documented, escalated and actioned quickly.
• Risk culture matters — commercial pressure destroys compliance integrity.
• Legacy systems need continuous upgrades to detect complex laundering patterns.
• Senior management must have full transparency of AML risks.

GO-AKS Insight

“The Swedbank Baltic scandal proves that AML failures rarely occur because of one bad decision — they are the result of years of ignored warnings, weak governance and a culture that prioritizes revenue over compliance. Modern AML teams must ensure strong escalation channels and independent oversight at all times.”