Swedbank is among the largest banks operating in Scandinavia and Baltics. Recent revelations show that the bank may have been used for wide-ranging, organized money laundering for almost a decade. A cumulative $5.8 billion is seen to have been channelled between suspicious accounts in Swedbank and the Danske Bank in the Baltics.
Around USD 26 million of the disputed amount is linked to the infamous Russian tax fraud exposed by accountant Sergei Magnitsky leading to his death. The Swedish television SVT has had exhaustive access in the last five months to a huge pile of classified documents detailing Danske Bank’s transactions with Swedbank. The documents show an elevated number of dealings between the suspected accounts between 2007 and 2015.
Around 50 of Swedbank’s customers are suspected to be involved in this possible money laundering syndicate transacting around USD 5.8 billion through the bank. A corruption expert who is also the chair of Transparency International’s Swedish chapter, Louise Brown, termed it as a massive scandal. The investigation reveals transactions that may be linked to the biggest Russian tax fraud in history.
This fraud led to the enactment of the Magnitsky Act in the US in 2012. The Federal government also imposed sanctions on several implicated Russian citizens. The 2007 Russian fraud involved a payment of USD 230 million in the form of phony tax refunds. The money originated from an American financier, Bill Browder, through his investment fund Hermitage Capital Management.
The investment fund paid huge profit taxes to the Russian government. Magnitsky investigated this fraud and the results showed that the perpetrators were seasoned career criminals, police officers, and judges. Instead of arresting the suspects, the police arrested the accountant. After spending some time in the grueling Butyrka prison, Magnitsky got diagnosed with pancreatitis.
The captive accountant was found dead in his cell on November 16, 2009, with his body bearing handcuff and physical assault marks. The investigator of the Magnitsky case in Moscow, Zoya Svetova, said that the accountant may have died due to lack of medical attention when he needed it or he was deliberately killed.
The USD 26 million from the tax fraud was sent to around 50 accounts in Swedbank as reported by SVT. The funds were transferred through companies suspected of many money laundering cases in the highly publicized Danske Bank scandal. Swedbank stated emphatically that they have zero tolerance on money laundering after that revelation.
Gabriel Francke Rodau, the Head of Group communication at Swedbank, told the SVT reporters that the bank actively monitors all transactions to reveal any criminal activity. He said that the bank has identified suspected money laundering and reported the matter to the Swedish Financial Intelligence Unit.
Authorities in Denmark, France, and the US have been actively investigating Danske Bank’s business in Estonia. Due to that money laundering scandal, Estonia’s Financial Supervision Authority issued a directive to Danske Bank prohibiting its activities in Estonia. The Bank is also expected to return all deposits to each of its customers in entirety and cease all its transactions and activities in Estonia within 8 months.
— Crypto_Vibes (@Crypto_Vibes) February 20, 2019
These scandals and criminal activities prove that the traditional global financial system needs to implement blockchain in all operations. Since nothing can be hidden on the blockchain, the perpetrators of such heinous acts can get caught easily. This would discourage individuals from engaging in criminal activities while transacting through financial institutions around the world.