Prevention of money laundering

How do we combat money laundering and terrorist financing?

A sustainable and trustworthy finance system is important for all of us. Only by trusting each other and working together can we ensure that the system functions smoothly. As a bank, we do our bit by undertaking activities to prevent money laundering and terrorist financing. We and the other banks are obliged by legislation to do this. In view of these obligations, and in order to serve our clients better and to look after their security, we ask you to fill out and regularly update the Customer Questionnaire for Legal Entities.

Please fill in the Customer Questionnaire for Legal Entities, which will help to meet the legal requirements, according to which we must:

  • get to know our client and understand the purpose and nature of his/her relationship with the bank;
  • have up-to-date and accurate customer information that allows for a responsible assessment of money laundering and terrorist financing risks and for timely protection of customers.

As a result, we are constantly reviewing and updating customer data. We establish and maintain business relationships only with those clients who act transparently and provide all the necessary information about themselves. We always notify them in advance about the need to fill in or update the Customer Questionnaire for Legal Entities. Remember to provide your contact information to the bank and follow the notifications in the online bank.

We request this information from both local natural persons and legal entities, and from our foreign clients, who are asked to provide reliable evidence substantiating their professional, economic, social or personal connection with our country.

Fill the Questionnaire
In order to implement the statutory requirements for customer knowledge, please periodically update the Questionnaire. The frequency of the update depends on various circumstances, e.g. potential risks of money laundering and terrorist financing. The bank will inform you of the upcoming date by which the Questionnaire must be updated. The legislation, by establishing strict requirements for customer recognition, also provides for sanctions that the bank may apply if the customer avoids or refuses to submit the Questionnaire at the request of the bank and within the set deadlines. There are no restrictions on clients who complete the Questionnaire in a timely and proper manner A Taxpayer Identification Number (TIN) is a personal identification number used for the exchange of tax information between different countries in accordance with the Common Reporting Standard (CRS) or the FATCA (Foreign Account Tax Compliant Act). In the case of a legal entity registered in Lithuania, the Taxpayer Code coincides with the customer’s personal ID code (or legal entity code from the Register of Legal Entities).

All the data that you submit to us is subject to strict security and confidentiality regulations.

We disclose customer data to third parties only with the written consent of the customer or when the disclosure is required by the competent authorities (law enforcement, tax administration, court, etc.), which have the right to receive information from the bank and such rights are supported by legislation.

In what cases do companies have to provide information about foreign beneficial owners?

If at least one of a company’s beneficial owners (a person who owns or somehow controls more than 25% of a company’s capital) is a citizen or taxpayer of USA or another foreign country, the company must supply information about his place of residence and citizenship, by completing Customer Questionnaire for Legal Entities.

You will find more information here:

  • IRS website
  • OECD website
  • website of VMI (State Tax Inspectorate of the Republic of Lithuania – Ministry of Finance)

You can complete and submit a Questionnaire in the way that is most convenient for you:

  • by logging in to Internet banking;
  • by coming into any branch of Swedbank. Bring a current document that establishes your identity (e.g. a personal ID card, passport).
The Questionnaire may be completed in Lithuanian, English and Russian.
  • In the part of the Questionnaire dealing with “Information about the ownership and control structure”, in the section headed “Shareholders” it is necessary to provide information about all the client’s shareholders.
  • In the part of the Questionnaire dealing with “Information about the ownership and control structure”, in the section headed “Beneficial owners” it is necessary to provide information about natural persons having direct or indirect control of more than 25% of the client’s shares (portion of capital) or voting rights or direct or indirect control of the client by other means. If there are no such people, the beneficial owner should be designated as the person filling the position of Manager or CEO of the client company, specifying what percentage of the shares he/she holds.
  • In the part of the Questionnaire dealing with “Information about the ownership and control structure”, in the section headed “Shareholders”, the shareholders are not specified.
  • In the part of the Questionnaire dealing with “Information about the ownership and control structure”, in the section headed “Beneficial owners”, the beneficial owner should be designated as the person filling the position of Manager or CEO of the client company, specifying what percentage of the shares he/she holds.
  • If the Questionnaire is being completed on the Swedbank internet banking website, in the part of the Questionnaire dealing with “Information about the ownership and control structure”, the client needs to write in the “Comments” section the following: “the number of shareholders of [name of client] is [number of shareholders]. Each shareholder of [name of client] has one vote each at a meeting of [name of client] shareholders.”

Note! We recommend that before submitting information in accordance with the previously specified regulations, check that each shareholder really has only one vote at meetings of the client’s shareholders.

Note! If the Customer Questionnaire for Legal Entities is being completed by a client (legal entity) whose legal form is – political party, please have an extra look here

  • In the part of the Questionnaire dealing with “Information about the ownership and control structure”, in the section headed “Shareholders”, information needs to be supplied about at least 5 of the client’s major shareholders. In the event that among the client’s shareholders there are natural persons or legal entities holding 10% or more of the client’s shares (or share of the capital), in the part of the Questionnaire dealing with “Information about the ownership and control structure”, in the section headed “Shareholders”, information also needs to be supplied about those shareholders (i.e. even if they are not among the client’s 5 major shareholders).
  • In the part of the Questionnaire dealing with “Information about the ownership and control structure”, in the section headed “Beneficial owners”, information needs to be supplied about natural persons who control, directly or indirectly, more than 25% of the client’s shares (or percentage of its capital) or voting rights or control the client, directly or indirectly, by other means. If there are no such people, the beneficial owner should be designated as the person filling the position of Manager or CEO of the client company, specifying what percentage of the shares he/she holds.
  • Since a political party can have a large number of members, naming them all is not in practice very expedient; so in the part of the Questionnaire dealing with “Information about the ownership and control structure”, in the section headed “Shareholders”, the shareholders shall be shown as those members who have an effective influence on the management of the political party: the leader of the political party, his assistant(s) and the party’s management organs.
  • ln the part of the Questionnaire dealing with “Information about the ownership and control structure”, in the section headed “Beneficial owners”, the beneficial owner should be shown as the person filling the position of Senior Executive (e.g. the leader of the political party), without showing the number of shares.
  • If the person shown as the beneficial owner is considered to be a politically exposed person (as specified earlier), in the part of the Questionnaire dealing with “Information about the ownership and control structure”, in the section headed “Beneficial owners”, it should be shown that the beneficial owner is a politically exposed person (PEP), and appropriate relevant information about this should be supplied.
  • In the part of the Questionnaire dealing with “Information about the ownership and control structure”, in the section headed “Shareholders”, the shareholders shall be shown as the administration of a certain municipality or the Office of the Government of the Republic of Lithuania.
  • ln the part of the Questionnaire dealing with “Information about the ownership and control structure”, in the section headed “Beneficial owners”, the beneficial owner should be shown as the person filling the position of Senior Executive (e.g. the chief executive), without showing the number of shares.
  • In the event that the client’s legal form is State enterprise (valstybės įmonė – VĮ), or a Municipal Enterprise (savivaldybės įmonė – SĮ), and the beneficial owner is shown as a politically exposed person (e.g. the leader or member of another organ of management), the part of the Questionnaire dealing with “Information about the ownership and control structure”, in the section headed “Beneficial owners” it should be indicated that the beneficial owner is a politically exposed person (PEP), and appropriate relevant information about this should be supplied.

When the owner and manager of an individual enterprise are the same person:

  • Under “Representatives” in the Questionnaire, the owner/manager of the individual enterprise should be specified;
  • In the part of the Questionnaire dealing with “Information about the ownership and control structure”, in the section headed “Shareholders”, the shareholders shall be shown as the owner/manager of the individual enterprise, specifying their 100% ownership of the shares;
  • ln the part of the Questionnaire dealing with “Information about the ownership and control structure”, in the section headed “Beneficial owners”, the beneficial owner should be shown as the owner/manager of the individual enterprise, specifying their 100% ownership of the shares;

When the owner and manager of an individual enterprise are different people:

  • Under “Representatives” in the Questionnaire, the manager of the individual enterprise should be specified;
  • In the part of the Questionnaire dealing with “Information about the ownership and control structure”, in the section headed “Shareholders”, the shareholder shall be shown as the owner of the individual enterprise, specifying his 100% ownership of the shares;
  • ln the part of the Questionnaire dealing with “Information about the ownership and control structure”, in the section headed “Beneficial owners”, the beneficial owner should be shown as the owner of the individual enterprise, specifying his 100% ownership of the shares.
  • In the part of the Questionnaire dealing with “Information about the ownership and control structure”, in the section headed “Shareholders”, the shareholder is not specified.
  • In the part of the Questionnaire dealing with “Information about the ownership and control structure”, in the section headed “Shareholders”, the shareholder is shown as the Ambassador of the foreign country, and no percentage of shares is specified. In these cases, it should be shown that the beneficial owner is a politically exposed person (PEP), and appropriate relevant information about this should be supplied.
  • The section “Registration address” of the section “Contact information” specifies the address that is the address of the customer’s office, registered in the Register of Legal Entities, and the section “Contact address” specifies the address that is the bankruptcy administrator’s contact address.
  • In the part of the Questionnaire dealing with “Information about the ownership and control structure”, in the section headed “Shareholders”, the shareholder is not specified.
  • In the part of the Questionnaire dealing with “Information about the ownership and control structure”, in the section headed “Beneficial owners” the beneficial owner should be shown as the bankruptcy administrator without indicating the part of shares.
  • The section “Economic activity” specifies the activities performed by the customer prior to the commencement of the bankruptcy process.
The law obliges us to receive the information specified in the Questionnaire directly from our customers. The information available to these authorities can be used as an additional source of data to verify the information you provide.

We ask representatives or beneficial owners of our customers (legal entities) to provide information about the fact that they or their family members (spouse, co-habiting partner, parents, siblings, children and children’s spouses, children’s co-habiting partners), close associates (persons with whom a person has common business, keeps professional or business relationship) presently occupy or in the recent 12 months have held an important public position in any state and/or international institution since the bank has to conduct enhanced monitoring of business relationship / monetary transactions of such clients.

Important public position shall be considered the following:

  • Head of the State, Head of the Government, a minister, a vice minister or a deputy minister, State Secretary, the Chancellor of the Parliament, Government or Ministry
  • Member of the Parliament
  • Member on the Supreme Court, the Constitutional Court or any other judicial authority, whose decisions are not subject to further appeal
  • Mayor of the municipality, director of the municipal administration
  • Member of the management body of the national supreme audit and control institution, the chairperson, deputy chairperson or a member of the board of the central bank
  • Ambassador, chargés d’affaire, Chief of Defence of the Republic of Lithuania, commanders of the armed forces and units, Chief of the Defence Staff or high-ranking officer in the armed forces of foreign country
  • Member of the management or supervisory body of a state enterprise, public company, private company all or part of shares of which awarding more than ½ of all votes in the general meeting of shareholders of these companies are held by the State by right of ownership
  • Member of the management or supervisory body of a municipal enterprise, public company, private company all or part of shares of which awarding more than ½ of all votes in the general meeting of shareholders of these companies are held by the State by right of ownership and which are considered to be large enterprises within the meaning of the Law of the Republic of Lithuania on Financial Reporting by Undertakings
  • Head, deputy head, member of the administrative, management or supervisory body of international intergovernmental organization
  • Leader, deputy leader, member of the administrative, management body of the political party
We request this information because we need to know the ownership and control structure of all our Clients (legal entities) and the natural persons within them in order to clearly identify the beneficial owners of the Client (legal entities). Such a request does not violate the requirements of the GDPR, as the bank asks you to provide such information in compliance with the legal knowledge requirements for the client. It is also important that the information provided is responsibly protected as we are committed to protecting it as a bank secret. We ask for this information because we want to be sure that the transactions performed by the client correspond to the business activities that the client has indicated in the Customer Questionnaire for Legal Entities. In cases where it is not clear which specific purchase was paid for by the foreign partner, we ask the customer to explain the monetary transaction and provide documents to help us determine whether this transaction corresponds to the business activity you have specified. We request such information in accordance with the law and the "Know Your Customer" principle.

The concept of beneficial owner is enshrined in the law, which defines the beneficial owner as a natural person who owns or controls a client (legal entity or foreign state-owned enterprise) and/or a natural person on whose behalf a transaction or activity is carried out in a legal entity.

In a legal entity, the beneficial owner is held to be a natural person who directly or indirectly owns or controls more than 25% of the shares or voting rights of the client, or who directly or indirectly controls the client in other ways. In cases where there is no natural person who directly or indirectly owns or controls more than 25% of the shares or voting rights of the client, or there is no natural person who directly or indirectly controls the client in other ways, the beneficial owner is considered to be the natural person in the senior management position (e.g. the client's Manager).

We would like to point out that we do not accept equity structures with bearer shares.

We always expect the ownership structures of our business customers (legal entities) to be transparent and the beneficial owners to be clear.

In order to get to know our customers and to maintain a business relationship based on mutual trust, we ask our customers to cooperate with us and with other responsible authorities (such as the State Enterprise Registers Centre), updating and providing relevant information about themselves, including accurate contact information, in case it is necessary to contact them.

We also urge our business customers to consider the possibility of having internal documents covering such matters as the fight against corruption and terrorist financing, sanctions, money laundering prevention policies and a corporate code of behaviour.

Important! If you do not complete the Customer Questionnaire for Legal Entities and submit it to us on time, we will not be able to provide you with some of our services, or maybe not any of them. This means that there may be limitations on the use of your bank account, your payment card(s), the Swedbank internet banking page and smart app; and other services may also be withheld from you. You will be able to resume using our services when you complete the Customer Questionnaire for Legal Entities and submit it to us. You will find more information in the General conditions of dealing with and servicing the customers.

Only together with our customers we can ensure the sustainability of the finance system. Therefore, we sincerely invite customers of our bank to join in the effort to create a sustainable finance system, by providing us with up-to-date information and drawing attention to suspicious activity, which may be associated with money laundering or terrorist financing. By sharing information with us, you help us to be better prepared to discover and to block the way of illegal activity.

Money laundering is activity aimed at hiding or obfuscating the true source of illegally obtained funds or other assets.

Terrorist financing is providing financial assistance in any form for the purpose of terrorist activity or to individuals who plan and foment terrorist activity, or who lead it.

We are taking all essential measures to block the path of this illegal activity.

International and Republic of Lithuania legislation provide a requirement for banks to implement the “Know Your Customer” principle in relation to new and current customers, specifying that banks have a duty to:

  • know what activities the customer is engaged in (what is the nature of his business), analyse his activities;
  • know who the beneficiaries of the customer are, i.e. natural persons in whose interests or for whose benefit the transactions or activities are carried out (the beneficiary of a legal identity is determined on the number of natural person(s), regardless of the number of controlling legal entities);
  • to carry out regular monitoring of the customer’s business relations, including examination of transactions concluded during such relations, to ensure that the executed transactions correspond to the bank’s knowledge of the customer and his business (type and nature of business, nature of transactions, business partners, field of operations, etc.) and the nature of the risk. Payment transactions are also considered to be transactions;
  • to understand the source (origin) of the customer’s funds.

The above-mentioned obligation to conduct a transaction ivestigation the bank can perform only after receiving from the customer explanations ragarding the operations performed on the customer's account and documents substantiating such operations, confirming the explanations provided by the customer.

The bank must also ensure that the money laundering and terrorist financing risk assessment is based on up-to-date and accurate information, and it must therefore regularly review and update the documents, data and information provided during the identification of the customer and the beneficiary. This provision applies not only to new but also to existing bank customers. The customer must notify the bank about any changes in this data.

When a customer is establishing business relations with a bank, the customer must fill out, as appropriate, Customer Questionnaire for Natural Persons or Customer Questionnaire for Legal Entities. These documents also need to be completed when updating information about the customer.

The bank shall ensure that the information provided by the customer and the data related to their business relations are protected in the same way as any other information constituting a bank secret. The main document regulating bank secrecy is the Republic of Lithuania Law on Banks of the (Article 55). The relationship between the bank and the customer due to the bank’s secrecy requirements is also regulated by the General conditions of dealing with and servicing the customers, as well as the Principles of personal data processing.

The principle Republic of Lithuania laws that set the requirements in the field of prevention of money laundering and terrorist financing are:

  • Republic of Lithuania Law on the Prevention of Money Laundering and Terrorist Financing (and other legislation subsequently adopted on this foundation);
  • Decision No. 03-17 of 12-02-2015 of the Board of the Bank of Lithuania to approve instructions to Finance market participants, seeking to block the path to money laundering and/or terrorist financing (new version No. 03-15 of 30-01-2020).

You can get more information about the legislation that regulates money laundering on the website of the Financial Crimes Investigation Service under the Republic of Lithuania Ministry of Internal Affairs http://www.fntt.lt.

All current Republic of Lithuania laws are publicly available at the website www.lrs.lt

Banks are bound by very strict legal requirements to implement the “Know Your Customer” principle and to reduce the various risks associated with illegal activities. The implementation of the “Know Your Customer” principle is linked to the application of international measures to prevent money laundering and terrorist financing. Banks must ensure that their infrastructure is not used by individuals who pose a threat to others and must therefore ensure that the origin of the customer’s assets and funds is transparent, that monetary transactions are understandable, economically sound and in line with declared activities. Yes, national and international legislation obliges all the country’s banks to apply the “Know Your Customer” principle.

If the bank is not provided with the necessary information or requested documents (and even if they are provided, but they do not answer the questions), in some cases the bank will no longer be able to provide you with services, e.g. it may refuse or suspend the execution of monetary operations or transactions, or apply restrictions on the use of the account, card(s), Internet banking.

Please note that the money in your account will not disappear, but you will be able to use the bank’s services only after you provide the necessary information or documents. In addition, if the bank does not receive the required information (or requested documents) from you, it may terminate its business relationship with you.

Information about customers (identity data, accounts, deposits, etc.) and their transactions received by the bank when providing financial services under the respective agreement is considered a bank secret and is protected in accordance with Republic of Lithuania legislation. The main document regulating bank secrecy is the Republic of Lithuania Law on Banks (Article 55). The relationship between the bank and the customer due to bank secrecy is also regulated by the General conditions of dealing with and servicing the customers,as well as the Principles of personal data processing. The bank may disclose information constituting a bank secret only to the customers themselves or their legal representatives, as well as to the authorities and other persons, as provided for in the Republic of Lithuania Law on Banks, and in the above-mentioned conditions and principles. A request for data does not mean that you are suspected of anything. Banks do not collect customer data on their own initiative, but because they are required by law to do so. This is a routine process and these requirements apply to all customers. This could be compared to airport security checks, where all passengers are screened pre-flight, for general security reasons.

Special attention is paid to business customers, as the company's cash can be used to avoid paying taxes and to participate in VAT avoidance schemes.

Cash can also be used for paying undeclared wages, which can have a negative impact on a country’s economic growth and can reduce workers’ social guarantees.

Such actions may give rise to money laundering or terrorist financing.

Swedbank aims to contribute to economic growth and to promote socially just and responsible business.

In order to get to know our customers and to maintain a business relationship based on mutual trust, we ask our customers to cooperate with us and with other responsible authorities (such as the State Enterprise Registers Centre), updating and providing relevant information about themselves, including accurate contact information, in case it is necessary to contact them.

We also urge our business customers to consider the possibility of having internal documents covering such matters as the fight against corruption and terrorist financing, sanctions, money laundering prevention policies and a corporate code of behaviour.

Swedbank maintains strict ethical and moral standards in its work and it collaborates with customers whose funds and assets are legitimate, with no doubts about its legality. What we expect from our customers is:

A customer’s activities must be shown and explained in the appropriate Customer Questionnaire for Natural Persons or Legal Entities, as required. It is also important that all customer’s transactions done using our infrastructure match the customer’s activities and/or their usual behaviour and the information that the customer has supplied to the bank.

A transparent source of funds means that the customer has documents showing the legality of the funds acquired by him or a legal entity that he controls, and if required these documents can be produced for the bank.

The concept of ‘source of funds’ means the specific origin of the funds that were used or may be used for a specific payment or transaction.

In our business dealings with a customer, we take into account negative publications or other public information about natural persons and legal entities. This includes any adverse information provided in various news sources.

We also encourage our customers to choose their business partners carefully, as through these partners our customers may be unknowingly implicated in money laundering schemes or in maintaining business relations with sanctioned entities. As a result, customers can risk their own reputation.

We expect our customers not to enter into transactions with legal entities or natural persons unrelated to that particular transaction. As companies registered in offshore jurisdictions (e.g. Belize, Panama, etc.) or limited liability (LP/LLP) companies (e.g. registered in the UK, Scotland, Canada) are at high risk of being involved in money laundering schemes, we do not accept transactions with such entities.

General information abouy international sanctions

International Sanctions are restrictive non-military measures put in place in order to preserve the international peace and security, as well as respect for human rights.
They are imposed by the United Nations (UN), the European Union (EU) or by individual countries (e.g. the United States (U.S.)). International Sanctions are imposed against entire states, as well as natural persons and legal entities, who violate the human rights, commit religious, ethnical, territorial conflicts, support terrorism, violate other international norms and principles.
The purpose of International Sanctions is to influence a change of behaviour, to stop prohibited activities or to restrain the sanctioned person. International Sanctions take various forms based on their purpose objective (e.g. to prevent armed conflict, counter terrorism). They can be individual (e.g. travel ban, asset freeze), target goods and services (e.g. arms embargoes or proliferation-related goods, dual-use goods), can be focused on core economic sectors (e.g. oil or financial sectors) or be comprehensive targeting entire country (e.g. North Korea).
Swedbank, as well as other financial institutions, implements International Financial Sanctions. It has to be pointed out that depending on the countries where the financial institutions operate, the lists of sanctions which the financial institutions follow could slightly differ.

  • UN sanctions. All UN members are obliged to accept and carry out Resolutions passed by UN Security Council.
  • EU sanctions. Sanctions are implemented through EU Council Regulations and have direct effect in all EU member states.
  • Swedbank also implements relevant U.S. Financial Sanctions based on the Swedbank Group Policy on Financial Sanctions.S. Financial Sanctions are imposed by U.S. President Executive Orders and implemented by the Office of Foreign Assets Control (OFAC) of the U.S. Department of the Treasury.

By following U.S. Financial Sanctions, Swedbank is being able to keep and maintain relations with banks in U.S. jurisdiction and provide to its customers transactions and other products/services in USD currency or transactions related to U.S. persons.

Links:

Swedbank implements above mentioned International Sanctions to the extent determined by the UN, the EU, the U.S. or state bodies (i.e. Government) and according to the Swedbank Group Policy on Financial Sanctions. Additionally, Swedbank considers correspondent banks requirements, as well as its own risk appetite. Therefore, Swedbank will not engage in any actions that directly or indirectly evade the Financial Sanctions prohibitions, correspondent banks requirements and Swedbank’s internal decisions.

Below are provided major types of International Sanctions implemented within Swedbank:

In case of imposed above mentioned sanctions Swedbank will reject transaction or will not provide any related products/services.

  • Arms embargoes/restrictions on dual-use goods and technology and related activities for military purposes (Defence sector). The same embargoes/restrictions can be imposed also for other goods (e.g. equipment used for internal repression, telecommunications’ monitoring and interception equipment). Swedbank is obliged not to participate in provision of financial assistance related to mentioned goods or related services.
  • Core economic sector sanctions – Sectorial Sanctions. Financial and energy sectors of the Russian Federation are affected by this type of sanctions:
  • Restrictions to provide access to capital markets and restrictions to issue new loans or credits to companies under Sectoral Sanctions (EU and U.S.);
  • Restrictions on certain items used in the oil industry (EU) and restrictions on goods/services for projects that have potential to produce oil in any location (U.S).

Swedbank will not provide any financial services restricted (e.g. loans, credits, dealings in financial instruments), as well as will not participate in any transactions related to prohibited activities (e.g. restrictions on provision, exportation, or reexportation of goods/services or technology in support of exploration or production for deepwater, Arctic offshore, or shale projects that have the potential to produce oil).

  • Comprehensive sanctions against defined countries/regions.g. North Korea is comprehensively sanctioned by the UN, the EU and the U.S.

It is important to mention that the asset freeze and some sectoral restrictions are also applicable to legal entities that are owned or controlled, directly or indirectly, by a designated person. Although those legal entities may not be designated and included into sanctions lists, the same sanctions are applicable for them and needed to be implemented by Swedbank.

EU imposed International Sanctions (including implemented UN sanctions) apply within the territory of EU and to all EU persons inside or outside the territory of EU. Thus, both financial institutions and their customers are legally responsible for complying with the EU sanctions and have the obligation to inform the competent authorities on the cases they know or suspect transactions with sanctioned subjects. Swedbank will always inform the competent authorities in case of breach of the EU Sanctions and freezing of funds. Examples when reporting is necessary:

  • The customer identifies that its partner or customer is the EU sanctioned person;
  • The customer identifies that beneficial owner of the legal entity which buys goods/services is the EU sanctioned person;
  • Etc.

As a low risk bank, Swedbank expects that its customers are aware of their business exposure towards International Sanctions, in order to avoid measures which could negatively affect their activities.

When the business activities extend to foreign countries, Swedbank advises its customers to assess potential risks related to International Sanctions before involving themselves in business relationships or transactions. Even if no embargoes or restrictions are imposed against a particular country, Swedbank recommends to evaluate if goods/services could be made available to or for the benefit of a sanctioned subjects. It is prohibited to make available funds or other assets to sanctioned subjects directly or indirectly.

International Sanctions are generally widely publicised, and customers have to understand and take actions regarding International Sanctions that might be relevant for them. Therefore, in case business activities involve foreign countries, in order to better mitigate the risks related to International Sanctions Swedbank advises its customers to take appropriate risk-mitigation steps:

  • to check what UN, EU and U.S. sanctions, as well as sanctions imposed by the local country are applicable for the particular country;
  • to perform due diligence on their partners and customers;
  • to discuss sanctions with their partners and customers;
  • to consult responsible authorities or seek independent legal advice in case of any questions or doubt related to implementation of International Sanctions.

Due to International Sanctions, Swedbank’s internal decisions and correspondent banks requirements, Swedbank has the right not to execute transactions (including crediting of funds) in any currencies related to the EU and U.S. comprehensively sanctioned countries/regions:

  1. Iran;
  2. Syria;
  3. North Korea;
  4. Crimea, Sevastopol.

Swedbank may also hold the customer’s transaction to/from any country/region where embargoes, other restrictive measures are imposed or to/from other high-risk countries/regions in order to investigate whether this transaction is not related to International Sanctions and is in line with correspondent banks’ requirements, as well as with Swedbank’s internal decisions and its own risk appetite. The execution of stopped international transactions may be delayed and customers may be asked to provide additional information and/or documents about their transactions because of such investigation.

The list of countries/regions inter alia includes (the provided list is not full as International Sanctions, as well as Swedbank’s internal decisions can be imposed/revoked over the time):

  1. Cuba;
  2. Iraq;
  3. Myanmar (Burma);
  4. Libya;
  5. Sudan and South Sudan;
  6. Yemen;
  7. Somalia;
  8. Transnistria region;
  9. Lugansk/ Donetsk;
  10. Etc.

In assessing if transaction is related to the above-mentioned countries/regions Swedbank will investigate connections to imposed International Sanctions and analyse additionally:

  • If transaction is related to a counterparty located or operating in one of the above-mentioned countries/regions. The relation could be direct (e.g. transaction is received from the sender with the address in Crimea) or indirect (e.g. transaction is received from other country (e.g. Turkey) but goods are being sent to Syria);
  • If transaction is related to front companies which help to avoid direct connection to the above-mentioned countries/regions;
  • If information provided in transaction details could be linked to the above-mentioned countries/regions (e.g. person name, vessel, name of city, harbour etc.);
  • If transaction lacks a substantial information to understand the transaction’s purpose;
  • Etc.

Additional observations

Swedbank would like to draw your attention to the fact that the term of executing international transaction (including crediting of funds) may be extended, or international transaction may be blocked or frozen by other banks which also participate in the execution of transaction (correspondent bank, bank of beneficiary or sender). Therefore, the customers should always evaluate potential International Sanctions risks by themselves.

Swedbank would like to draw your attention to the fact that both the EU and the U.S. imposed broad (comprehensive) International Sanctions related to Crimea and Sevastopol regions. These sanctions cover restrictions and prohibitions on imports, exports, investments and financing in relation to these regions.

Due to the current situation, Swedbank’s internal decisions and correspondent banks requirements, Swedbank will not, as a rule, perform international transactions (both outgoing and incoming) to these regions or related to these regions (e.g. beneficiary address is indicated in Crimea) in any currencies.

There are restrictive measures (Sectoral Sanctions) adopted by the EU and the U.S. on access to the capital market and new credits to defined Russian banks (i.e. Gazprombank, the Russian Agricultural Bank, Sberbank of Russia, Vnesheconombank, VTB Bank etc.). Swedbank has to ensure that international transactions related to the mentioned banks do not violate restrictions imposed. Therefore, Swedbank could conduct additional investigations on related transactions. As transactions associated with concealed financing are difficult to detect the fulfilment of the payment order may be delayed.

Both the EU and the U.S have imposed sanctions against the administrative bodies of the Lugansk and Donetsk regions, as well as subjects closely linked to such bodies. Execution of transactions, the addresses and details of which contain any reference to the respective regions and subjects registered there, may take more time or their execution may be refused, due to the restrictions and prohibitions in place.

Military goods cover military technology and equipment which might be used for internal repression or international aggression or contribute to regional instability.

Dual-use goods are items, including software and technology, which can be used for both civil and military purposes, and shall include all goods which can be used for both non-explosive uses and assisting in any way in the manufacture of nuclear weapons or other nuclear explosive devices.

Usually when arms embargoes/restrictions on dual-use goods are imposed, related technical, financial assistance, as well as other services are also prohibited. Although the primary responsibility for the classification of goods and technologies lies with the customers sending or receiving such items, the prohibition to provide financial assistance is also mandatory for financial institutions, it means for Swedbank as well.

The prohibition on military goods/dual-use goods means that Swedbank cannot participate in any financial transactions, provide business support or any financial support to customers that sell, supply, transfer, mediate or export such goods to restricted countries/regions (e.g. the Russian Federation), if they are intended for military purposes, or sell, supply, transfer or export such goods to the certain EU listed subjects. Therefore, Swedbank could conduct additional investigations on related transactions. Thus, the fulfilment of the payment order may be delayed.

There are items related to energy sector listed by EU which are restricted to be exported to the Russian Federation. U.S. has imposed restrictions on all goods/non-financial services or technology in support of energy projects. Therefore, Swedbank must be aware if the customer has an authorization from authorities in order not to be involved in prohibited transactions.

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Please note, if you or your company operate(s) in the field of shipping or are (is) connected to mentioned field of activity, then according to international shipping area regulations it is mandatory to add the following information to the field “details of payment”:

  • M/V: name of the ship;
  • IMO: international maritime organisation number;
  • FLAG: flag state;
  • OWNERSHIP: name of the owner;
  • REGISTRATION: number and the country.

Otherwise, transaction might be delayed since the missing details will be inquired from the bank of payer. If transaction is not performed in accordance with international standards (including the U.S. legal acts) transaction might be frozen in the correspondent bank.

Swedbank classifies field of Transportation as a high-risk industry by the reason of possible transportation of sanctioned goods (e.g. Military goods, Dual-use goods, Goods related to energy sector) and provision of services which are prohibited by UN, EU or U.S. requirements.

Please note, if you or your company operate(s) in the field of transportation or are (is) connected to mentioned field of activity, then you will be required to provide following information to Swedbank:

  • Information regarding transported goods (including, but not limited to the following: certificates of origin of goods, bills, invoices, transportation documents (e.g. rail, airway bills), etc.);
  • Information regarding final destination/final beneficiary of goods (beneficiary name, registration number, country, address);
  • Information regarding consignor (consignor name, registration number, country, address);
  • Etc.

N.B.

If Swedbank requests you to provide information/documents and received information/documents will not include all necessary information, the fulfilment of the payment order might be delayed.

Swedbank does not tolerate situations when transaction data (i.e. beneficiary’s name/surname, address, etc.) is altered or stripped in order to bypass Swedbank risk mitigation measures or conceal potential links with subjects to International Sanctions.

Therefore, if your company operates in countries, which are included in Swedbank’s binding sanctions lists, you may be required to submit information regarding risks related to International Sanctions internal control system measures taken within your company.