OFAC claims that a customer who owned three special purpose companies (SPCs) used the accounts of those firms at Swedbank Latvia to initiate 386 transactions through the bank’s e-banking platform from a Crimea-based IP address.
This way, payments totalling $3,312,120 were send to individuals in Crimea through U.S. correspondent banks between 2015 and 2016.
The transactions were rejected In March 2016 by a U.S. bank but a Swedbank Latvia relationship manager redirected the payments then to another U.S. correspondent bank after receiving assurances from the client that none of the transactions involved Crimea.
However, OFAC said that Swedbank Latvia had reason to believe that the client's assertions were false, as the bank had obtained Know Your Customer (KYC) data during onboarding that clearly indicated a physical presence in Crimea but didn’t incorporate this data into its sanctions screening procedure.
Additionally, Swedbank Latvia did not voluntarily disclose the offenses, as a third party reported them to OFAC before the bank did.
In a similar crisis three years ago, the Latvian branch of Swedbank faced charges against 11 individuals, primarily former employees, accused of money laundering. The employees allegedly neglected anti-money laundering protocols, allowing suspicious transactions until 2017.
Swedbank reported the identified transactions to financial authorities after they were discovered internally and brought to light by the media.
The bank said it had learned its lesson from the incidents.
“Swedbank takes the historical shortcomings seriously, and has learned from them in the comprehensive work that has been performed to strengthen internal governance and control,” Head of Special Task Force and Deputy President and CEO, Swedbank, Tomas Hedberg, said in a statement.
