Swedbank, Sweden's oldest bank, has suspended the head of its Estonian business and its Estonian chief financial officer. This is a continuation of the 'time of troubles' that began recently when the bank was caught up in the Danske Bank money laundering imbroglio.

Robert Kitt has been Swedbank's chief executive in Estonia since 2015. Vaiko Tammevali has been the chief financial officer there since the preceding year. Both have left the bank’s Estonian board and have been suspended from their jobs until further notice. Priit Perens, a member of Swedbank Estonia's council, has also left his job. All three fell foul of an "ongoing in-depth internal investigation with the help of external resources" that concentrated on the bank’s money-laundering controls.

The Council of Swedbank Estonia has elected Olavi Lepp, currently the chief risk officer, to replace Kitt as chairman of the Estonian management board and as CEO of Swedbank Estonia on a temporary basis. Anna Kõuts, currently the head of treasury, has also become acting chief financial officer and a temporary member of the board, replacing Tammevali. Both these changes are subject to approval from the Government.

“Today’s decision is a consequence of the ongoing internal investigation. 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. We will continue developing Estonian’s leading bank with society and customers in focus”, said Charlotte Elsnitz, Swedbank's head of Baltic banking.

The Estonian Financial Supervision Authority has now finished investigating Swedbank's money laundering controls and has also visited other banks such as SEB. Kilvar Kessler, the chairman of its board, told reporters that he had uncovered recurring weaknesses in banks' control systems, although the banks had been making improvements. He is quoted as saying: “Most of the risk is [rooted in] the past but some of the risk elements are still there. We don’t want to see sloppy banking here.”

As if to confirm his words, Estonia's Central Criminal Police have this month arrested and detained three heads of department at Tallinn Business Bank on suspicion of money laundering and, in one case, of accepting bribes also. The news service err.ee believes that "non-resident transactions" (presumably involving offshore bank accounts held by non-residents of the country) are involved. When the police spoke to err.ee about the case they made more than a passing reference to illicit cash flows from outside the European Union, of which Estonia is a member. They revealed that that case was not, however, linked to the Danske Bank débâcle.

Kitt, Tammevali and Perens have not been the only high-ranking Nordic bankers to suffer in the wake of the Estonian imbroglio. In late March the board of Swedbank asked CEO Brigitte Bonnesen, 62, to leave. At the time allegations had just surfaced about the bank’s Estonian business and suggestions that it accepted high-risk customers without doing enough checking, and also that it let Paul Manafort receive suspicious payments and misled the Americans about transactions by customers linked to Mossack Fonseca.

One allegation, made by SVT, the country's state TV network, was that 50 clients transferred at least 40 billion crowns (US$4.3 billion) between Baltic accounts at Swedbank and Danske Bank over the same period. On 26 February, Swedbank CEO Birgitte Bonnesen appointed Forensic Risk Alliance to conduct an investigation regarding the 50 named entities referred to in the TV programme Uppdrag granskning.

SVT's website says: "One of the largest banks in Sweden, Swedbank, may have been used for extensive, systematic money laundering for nearly a decade. A total of US$5.8 billion has been funnelled between suspect accounts in Swedbank and Danske Bank in the Baltics. Of this, US$26 million is linked to the Russian tax fraud that was uncovered by accountant Sergei Magnitsky.”

In April, the investor-activist Bill Browder, the CEO of Hermitage Capital, sent a criminal complaint about the bank to the Latvian authorities in which he alleged that the bank had become embroiled in the Russian money-laundering scandal involving Magnitsky, who died in Russian Government custody. He had already written a similar report to the Swedish prosecutor's office in March, but that office had declined to investigate.