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Swedish bank may face US probe over reported violation of sanctions against Russia

Swedish bank may face US probe over reported violation of sanctions against Russia
US authorities are reportedly investigating whether one of Sweden's largest lenders, Swedbank, breached US sanctions targeting Russia as it allowed transactions between Russian arms producer Kalashnikov and its US-based namesake.

Swedish public broadcaster SVT claims that “major shareholders” of the Russia-based arms manufacturer Kalashnikov, which was targeted by US restrictions back in 2014, sent money to its counterpart headquartered in Pompano Beach, Florida. The latter produces guns based on Russian designs, but the parts originate from the US helping the company to avoid the blacklisting.

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SVT said that Swedbank allowed “major owners in Russian Kalashnikov” to send a loan of more than $1 million to the US-based arms producer. However, any financial operations between the two entities would violate Washington’s sanctions and the move could constitute a breach.

The report claims that one of the main people involved in the operation was Russian billionaire Iskander Makhmudov, who was both a shareholder of Concern Kalashnikov and the biggest client of Swedbank’s Estonia branch. The money was reportedly received by “key people at Kalashnikov USA” as they controlled accounts at Bank of America where the transferred sum ended up.

The Russian businessman has never been a major shareholder of Concern Kalashnikov. In 2015 he bought 12.25 percent of the company’s stock, but sold his shares back in 2017, according to Forbes. A representative for Makhmudov told SVT that he has never controlled the arms firm and therefore isn’t subject to sanctions.

On Wednesday, Swedbank responded to the allegations saying that it is not aware of any violations of US sanctions against Russia. Meanwhile the lender continues to investigate a money laundering scheme earlier reported by the same broadcaster.

“If there has been unethical behavior ... we should of course get the bottom of it,” Swedbank CEO Jens Henriksson said in a statement, adding that the internal investigation is expected to be concluded early next year.

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