The US authorities have launched an investigation into money laundering at Scandinavian-owned banks in the Baltic states. Although Lithuania is not in focus, the probe still casts a shadow over the financial sector. Meanwhile, the banks remain silent.
Two committees in the Lithuanian parliament, Seimas, discussed the probe in a closed-door meeting on Wednesday, agreeing that the country needed to invest more into money laundering prevention.
Read more: Lithuania ‘cooperating’ with Denmark in Danske Bank money laundering investigation
Laurynas Kasčiūnas, the conservative chairman of the parliamentary Committee on National Security and Defence, said after the meeting that Lithuania was not named in the investigation, which looks into Scandinavian banks' branches in the Baltic states, but “a shadow is cast on everyone”.
US inquiries
Sweden's Dagens Industri business daily reported in December that the United States Federal Bureau of Investigation was carrying out an investigation into Scandinavian banks SEB, Swedbank, and Danske Bank over alleged violations committed by their branches in the Baltic states.
In the article, Dagens Industri cited sources saying that US institutions suspected the three banks' branches in the Baltic states engaged in fraud and money laundering. Sweden's Ministry of Justice was reported to have received a legal assistance request from the United States last summer.
The article led to a drop in the banks' share prices.
Reputational hazard
“The investigations are being carried out regarding banks operating in the other Baltic states [Latvia and Estonia], and a shadow is cast on all Baltic states," National Security and Defence Committee chairman Kasčiūnas told BNS.
"At this moment we can say that Lithuania is not mentioned. But we, institutions and politicians, need to proactively communicate that Lithuania is not involved in this. Lithuania is not in the black hole,” he added.
Read more: FinCEN leaks in Baltics: Latvia exposed as ‘high-risk jurisdiction’
Meanwhile Mykolas Majauskas, the chairman of the Committee on Budget and Finance, said that due to the investigations, Baltic banks sometimes faced difficulties when carrying out international operations in US dollars.
If Lithuania lost the status of a reliably country in the international financial sector, the country's banks and enterprises may be affected, Majauskas underlined.
No inquiries from US
Karolina Frolovienė, a spokeswoman for Lithuania's Justice Ministry, told BNS the ministry did not receive any inquiries from the US.
The Bank of Lithuania says it has no information on US investigations against banks operating in Lithuania either.
“The Bank of Lithuania has not received official information, including cooperation requests, on ongoing investigations in the US. We have information of general nature from publicly accessible sources, in which banks operating in Lithuania are not mentioned,” Giedrius Sniukas, a spokesman for the central bank, told BNS.
Meanwhile, the Scandinavian banks that have branches in Lithuania say media reports about the US investigation contain no new information, adding, however, that they cannot provide any details about ongoing probes.
“It is known that we are being investigated by the authorities in Denmark, the US, Estonia and France, and we continue to be in close dialogue with them all, which we have previously communicated. However, we remain unable to estimate any potential outcome of these dialogues. This, as well as the timing, remains uncertain,” said Stefan Singh Kailay, the head of media relations at Danske Bank.
“The group has reported it in its previous financial statements and that is not new information. Swedbank is cooperating with US institutions and providing all the information necessary for the investigations, but due to legal reasons, we cannot disclose which institutions are carrying out these investigations,” according to Saulius Abraškevičius, a spokesman for Swedbank.
SEB bank says it has earlier reported about inquiries received from US government institutions, related to the bank's measures against money laundering.
“As there are foreign authorities that have a ban on disclosure and as there is regulation regarding information-sharing that we have to relate to, we have chosen not to mention individual authorities, but we always work in full transparency with all authorities that ask us questions,” Frank Hojem, a spokesman for SEB, told BNS.
“Given the recently concluded supervisory reviews in Sweden and the Baltics, it is natural that other supervisory authorities ask us questions. We have, however, not been informed of any accusations against SEB and we are, to the best of our knowledge, not subject to any sanction process.”
The biggest money laundering scandal broke out in 2018 when Danske admitted that around 200 million euros from Russia and other countries had been transferred via its Estonian branch.
The shadow of suspicion was later cast on Sweden. Swedbank and SEB were also sanctioned for failing to ensure money laundering prevention.
Lithuanian officials have stressed that Lithuania is better at managing money laundering risks than its neighbours Latvia and Estonia.
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