The Swedish financial regulator has handed Skandinaviska Enskilda Banken AB a 1 billion kronor fine for failing to sufficiently identify the risk of money laundering in its Baltic operations. It also found that the Swedish lender had deficiencies in its governance and control of its Baltic subsidiaries' measures against money laundering.
"Despite the elevated risk of money laundering in the Baltics, the bank has done too little, too late," said Erik Thedéen, director general of Finansinspektionen.
Finansinspektionen's investigation, which covers SEB's operations from 2015 to the first quarter of 2019, shows that the bank's subsidiaries in the Baltics were exposed to an elevated risk of money laundering. At the same time, there were "deficiencies" in its controls to identify and manage money laundering risks associated with some of its non-resident customers as well as resident customers with foreign owners.
SEB's internal control functions and transaction monitoring had also not received sufficient resources, it found.
SEB admitted in November that it processed €25.8 billion of flows from "low-transparency" clients in Estonia between 2005 and 2018 that would not meet current standards of transparency nor have links to authentic business activity.
The bank said at the time it had taken "considerable measures" to reduce its risk exposure to money laundering and terminated a large number of customer relations following criticism from Estonia's financial supervisory authority over its handling of nonresident clients and information from an external whistleblower in 2006.
Despite these efforts, Finansinspektionen found that SEB had failed to comply with legal requirements around anti-money laundering, and thus gave the bank a fine and a remark. It also ordered the Swedish operations to take measures to improve its transaction monitoring.
Conclusion of multiple investigations
Finansinspektionen's investigation was coordinated with regulatory authorities in Estonia, Latvia and Lithuania. SEB's Estonian unit also received a precept and a fine of €1 million from the Estonian financial supervisory authority for breaches of local anti-money laundering requirements.
The announcement marks an end to all investigations of SEB's anti-money laundering work by the Swedish and Baltic supervisory authorities, SEB said in a statement June 25.
CEO Johan Torgeby said SEB will now analyze the decision. "We always strive to adhere to current regulations and our high internal standards, and we continuously develop the bank's abilities to prevent, detect and report suspected money laundering and other types of financial crime. That work is of highest priority and will never end, not least since crime constantly finds new ways," he said.
The news comes after Finansinspektionen imposed a 4 billion kronor fine on Swedish peer Swedbank AB (publ) in March over similar failures after it had been linked to Danske Bank A/S's €200 billion money-laundering scandal in the Baltics.
Finansinspektionen was meant to release the findings of its investigation into SEB in April, but this deadline was postponed due to a change in prioritization amid the coronavirus crisis.
As of June 24, US$1 was equivalent to 9.33 Swedish kronor.