Finnish bank Nordea will avoid liability for involvement in large-scale money laundering schemes from Russia
From 2012 to 2017, according to published documents from the Financial Supervisory Authority of Finland, Nordea had very weak compliance with anti-money laundering measures and may have been involved in dubious funds transfer schemes dubbed Russian Laundromat and Laundromat Troika. According to Helsingen Sanomat, Nordea is likely to escape punishment because the statute of limitations for violations has expired due to the slowness of the inspection authorities.
Finanssivalvonta (Fiva), a financial supervisory service that oversees banks, found that Nordea had serious deficiencies in monitoring money laundering from 2012 to 2017. In 2017, the Finnish partner publication OCCRP Yle, as part of a joint investigation, discovered that almost 20 million euros were laundered from Russia through Finnish companies in a scheme called the Russian Laundromat.
During the audit, Fiva identified many shortcomings in the measures that banks should take to combat Russian money laundering. The Finnish branch of Danske Bank, and then Nordea, were suspected of violations. Several dubious episodes in Danske Bank related to the events of 2014-2015. According to Fiva, Danske Bank’s actions were “at the very least” negligent.
In a 2022 report on Nordea, the financial service noted that between 2012 and 2017, the bank did not fully comply with the customer compliance assessment requirements established by the Anti-Money Laundering Law. Fiva found weaknesses in “virtually all key areas of anti-money laundering, terrorist financing and risk management.”
The sample for verification included 12 companies, for two of which Nordea did not even have extracts from the commercial register and information about the ultimate beneficiaries. Information about the remaining ten companies was incomplete.
According to Fiva, the detected flaws are so serious that Nordea can be considered an intermediary in money laundering from Russia. For example, the bank did not in all cases receive the information required by law on the origin of funds and the purpose of payments.
Over the years, Nordea has accumulated many warnings about possible money laundering. Most of the submissions for the period from 2011 to 2015 were not considered. In 2014, the bank examined only ten percent of allegations of possible violations. In 2016-2017, he solved the problem by simply removing unchecked warnings from the system.
The report from the Financial Supervisory Authority says that Nordea management was late in reporting money laundering. There were “lots of problems” with the money transfer monitoring system, and at least one system error was found in the software.
Fiva also notes that Nordea began conducting due diligence on offshore counterparties not immediately after the risks of “tax havens” were identified.
Nordea told reporters from Helsingen Sanomat that they were taking all necessary measures to prevent money laundering, and Fiva’s conclusions are partly based on misunderstandings. The bank also said that it was only in 2017 that they learned that some of their high-risk clients were involved in the schemes.
The FSA investigated Nordea and Danske but failed to take action that would result in a fine or other administrative penalties.
In both cases, the statutory deadline for imposing sanctions was missed. Investigations either started too late or took too long, and Fiva’s right to impose administrative penalties expires after five years.