Six Nordic Banks Team To Take On AML Issues

Six major banks in the Nordic region will form a customer checking center to help combat money laundering and improve the reputation of the area’s financial institutions, according to a report by Reuters. 

The banks involved will be Danske Bank, Swedbank Handelsbanken, Nordea, SEB and DNB. The banks said the KYC Utility would gather know your customer (KYC) checks to start with at large and medium-sized companies in the region, and also start offering commercial services. 

Money laundering is a big concern for the region after Danske Bank and Swedbank were implicated in scandals that cost them both billions in their value on the market. 

In March, the head of the Financial Supervisory Authority (FSA) in Finland warned that Nordic banks involved in money-laundering scandals should be measured in their response and not withdraw from the area.

“This money laundering discussion is very close to panic, and that is very dangerous,” said Anneli Tuominen, director general of the FSA in Helsinki.

Danske has a $230 billion scandal through its Estonian branch, and it’s retreating from the entire Baltic region, including Russia. Nordea is partially pulling out and Sweden’s banks might go as well, although Swedbank has said it’s not going anywhere and that it’s committed to the region.

“It would be the worst possible end result of this discussion if banks would suddenly start to withdraw money from certain markets,” Tuominen said. If there’s a lesson, she continued, it’s to “learn and do better,” not to leave.

Nordic banks are the bedrock of the Baltic financial system, and during the economic crisis in 2009, Swedish krona and banks were the ones that got hurt the most. Lenders in the region stayed and weathered the storm, and then were rewarded when the economy bounced back.

Now, all three Baltic countries are members of the eurozone, but because they’re so close to Russia, some analysts think they’re a first place of entry for criminals who want to launder money and get capital to the West.

Tuominen said she wants the European Union to facilitate creation of a watchdog organization that would oversee banks.

“We need an independent EU-wide supervisory anti-money laundering [AML] authority,” she said.