Swedbank A

Legal Proceedings Report • Mar 11, 2020

Swedbank notifies OFAC of potential sanction violations

Swedbank notifies OFAC of potential sanction violations

The investigation of Swedbank's work on anti-money laundering conducted by the

law firm Clifford Chance has found that transactions amounting to approximately

USD 4.8 million in total constitute potential sanction violations. The bank will

therefore be making a report to the U.S. Treasury's Office of Foreign Assets

Control (OFAC).

OFAC enforces compliance with U.S. sanctions imposed against countries or

specific economic sanctions targets - organisations, companies or persons. A

sanction breach means for example that a bank processed a transaction involving

an OFAC sanctioned person, entity or jurisdiction, and the U.S. financial

system, U.S. person, or other U.S elements.

On behalf of the Board of Swedbank, the law firm Clifford Chance has been

conducting an investigation since February 2019, which includes clients,

transactions and activities from 2007 to March 2019 and how the bank has handled

internal and external disclosures. Clifford Chance is also examining how

Swedbank has responded historically to identified AML and sanctions controls

shortcomings.

In this work Clifford Chance examined all the USD denominated transactions from

the three Baltic subsidiaries in Estonia, Latvia, and Lithuania, processed

through the U.S financial system during the period 22 March 2014 through 22

March 2019. A five-year period was chosen in light of the applicable statute of

limitations.

Clifford Chance has found 586 transactions amounting to approximately USD 4.8

million which constitute potential OFAC violations, 95% of which were processed

by the Bank in the period 2015 - 2016. 508 transactions constitute salary

payments and payments associated with the operation of a vessel whose owner and

operator are located in Crimea and used Swedbank in the Baltics. Crimea is

subject to broad U.S. economic sanctions.

- I have been clear regarding the fact that Clifford Chance is to report any

suspected sanction breaches that they may have come across in the investigation.

This has now occurred. We are now immediately proceeding with a self-report to

OFAC. This shows that the bank's process for Know Your Customer, transaction

monitoring and internal governance and control have had shortcomings. At the

same time, it is some relief that it regards a relatively low amount and

transactions such as salary payments, says Jens Henriksson, President and CEO of

Swedbank.

Extensive work has been ongoing to remedy shortcomings in the bank's work

against money laundering and other financial crimes. At the end of January this

year, the bank's action program included 152 initiatives. Further measures to

prevent sanction breaches are implemented as part of the program.

Swedbank is reporting the suspected transactions to OFAC. It is now a matter for

the U.S. authority to decide how to proceed with the case, and potential

consequences. The bank will cooperate fully with OFAC to resolve the matter.

The bank has now received an oral presentation from Clifford Chance of their

investigation concerning possible OFAC violations in the Baltics. The

information in this press release is based on this oral presentation.

The report from Clifford Chance will be presented on March 23 - as stated in a

separate press release.

Contact:

Unni Jerndal, Head of Press Swedbank, phone + 46 73 092 11 80

This announcement involves the disclosure of inside information

Swedbank AB (publ) is required to disclose this information pursuant to

Regulation (EU) No 596/2014 on market abuse, the Swedish Securities Markets Act

(2007:528), the Swedish Financial Instruments Trading Act (1991:980) and the

regulatory framework of Nasdaq Stockholm. This information was sent to be

published on 11 March, 2020 at 08:15 CET.

Swedbank encourages a sound and sustainable financial situation for the many

households and businesses. As a leading bank in our home markets of Sweden,

Estonia, Latvia and Lithuania, Swedbank offers a wide range of financial

services and products. Swedbank has over 7 million retail customers and around

600 000 corporate customers and organisations with 168 branches in Sweden and 99

branches in the Baltic countries. The group is also present in other Nordic

countries, the US and China. As of 31 December, 2019 the group had operating

profit of 24 420 SEKbn. Read more at www.swedbank.com