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Swedbank suspends chiefs at Estonian arm after money laundering review

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Swedbank suspends chiefs at Estonian arm after money laundering review
FILE PHOTO: Swedbank signs are seen on a building in Vilnius, Lithuania March 30, 2019. REUTERS/Ints Kalnins/File Photo   -   Copyright  Ints Kalnins(Reuters)
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STOCKHOLM (Reuters) – Swedbank has suspended the two top executives at its Estonian business with immediate effect, acting on an internal investigation into compliance with money-laundering rules at the bank.

Sweden’s oldest retail bank has faced a turbulent year after being linked to a money laundering scandal originating at Danske Bank, which has said its Estonia branch was used to move 200 billion euros (£179.2 billion) of suspicious funds from 2007 to 2015.

Swedbank – whose group CEO and chairman departed amid the turmoil – admitted in late April to failings in combating money laundering and announced an internal inquiry to review its current and historic customer relationships through its Baltic units.

Swedbank said late on Monday the probe was continuing as it announced findings from the investigation so far had prompted it to suspend Robert Kitt, who has been Estonia CEO from 2015, and Vaiko Tammevali, Estonia CFO since 2014.

“Today’s decision is a consequence of the ongoing internal investigation,” Swedbank’s head of Baltic Banking, Charlotte Elsnitz, said in a statement.

“We are fully committed to the Estonian market and to all our employees, customers and other stakeholders. Estonia is one of four home markets of Swedbank.”

Kitt and Tammevali could not immediately be reached for comment.

The bank’s shares, which have lost about a third in value since the scandal broke, were down 1.5 percent at 138.55 Swedish crowns at 0735 GMT.

The most recent allegations against Swedbank, reported by Swedish state TV, stated that the lender had processed gross transactions of up to 20 billion euros a year from high-risk, non-resident clients, mostly Russian, through its Estonian branch from 2010 to 2016. Previous allegations had related to a period between 2007 and 2015.

Credit Suisse analysts said that the removals meant that essentially all top management in Estonia had been changed, which could help bank in any discussions with authorities.

The Estonian financial regulator declined to comment and said that their ongoing forward investigation with Sweden and other Baltic authorities was ongoing.

Swedbank said it was cooperating fully with authorities in Sweden, the United States and the Baltic countries in their investigations.

The lender said Olavi Lepp, currently chief risk officer, had been named acting CEO of Swedbank Estonia, while Anna Kouts, currently head of treasury, would become acting CFO.

(Reporting by Johannes Hellstrom and Esha Vaish, editing by Deepa Babington/Keith Weir)

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