Swedbank’s Former CEO Faces Prison for Role in Baltic Money Laundering Scandal

The fallout from Danske Bank’s massive money laundering operation in the Baltics has claimed another high-profile casualty: Swedbank’s former CEO, Birgitte Bonnesen. Facing a one year and three months prison sentence, Bonnesen has been held accountable for her misleading statements about Swedbank’s own involvement in the scandal that rocked the Nordic banking industry.

Danske Bank, which managed to escape with a hefty $2 billion fine from the U.S. government, moved up to $800 billion in illicit funds through its Baltic branches. Swedbank, though less deeply involved, still funneled around €80 billion of dirty money, primarily from Russian oligarchs, through its own Baltic operations. While Danske avoided direct accountability for its executives, Swedbank has paid a far more personal price, with Bonnesen now at the center of the scandal.

Both banks were key players in what has been described as an industrial-scale corporate cover-up, allowing oligarchs and organized crime to launder vast sums of dirty money through the European banking system. Danske alone shifted close to $800 billion in suspicious funds, while Swedbank admitted to moving some €80 billion of dubious origin. The two banks turned a blind eye to these transactions for years, particularly when it came to filtering Russian money through their Baltic subsidiaries and into the Western financial system.

While these transactions passed largely unnoticed in Europe, the U.S. took a far more critical stance. The American Treasury Department launched an extensive investigation into Danske’s activities, leading to the multibillion-dollar fine and a conclusion to the case last year. Swedbank, meanwhile, found itself caught in the crossfire, with Bonnesen accused of downplaying her own bank’s exposure to the same issues.

In January 2022, Bonnesen was formally charged with fraud and market manipulation by Sweden’s Economic Crime Authority. Her downfall stemmed from statements made in late 2018 and early 2019, where she attempted to distance Swedbank from the Danske scandal by underplaying its anti-money laundering (AML) risks. This, according to the court, amounted to fraud because it misled both shareholders and the public. On Tuesday, an appeal court confirmed that her misleading statements were, in fact, criminal, and sentenced her to prison.

Swedbank itself was not without blame. A report commissioned by the bank and conducted by Clifford Chance revealed that between 2014 and 2019, Swedbank conducted €37 billion in transactions that carried a high risk of money laundering. Moreover, an internal investigation found that between 2008 and 2013, Swedbank moved approximately €80 billion through its Baltic branches, primarily from Russian and ex-Soviet clients. Despite these damning findings, the bank decided not to pursue legal action against Bonnesen or her predecessor, Michael Wolf, who was in charge from 2009 until 2016.

In the wake of the scandal, Bonnesen’s severance pay was cancelled in March 2020, following the Clifford Chance report’s conclusion that her statements during the crisis were “inaccurate or presented without sufficient context.” Swedbank’s decision not to pursue further legal action against Bonnesen or Wolf, despite their roles in overseeing the bank’s Baltic operations, has been a notable aspect of the saga.

Bonnesen is appealing the court's ruling and her prison sentence, but her professional reputation is in ruins. Once a respected figure in the banking world, she has now become the public face of the Baltic money-laundering scandal. While she has been held accountable, she is far from the only individual at fault in this murky affair of tacit approval and turning a blind eye to financial crime.

The scandal has had a broader impact on European banking, too. Under pressure from the U.S. and public scrutiny, Europe has been forced to confront its own shortcomings in anti-money laundering (AML) regulation. The European Union, often seen as lax in its AML enforcement compared to the U.S., was pushed to create a new Anti-Money Laundering Authority (AMLA) earlier this year, marking a significant shift in how the region polices financial crime.

By fLEXI tEAM