Skandinaviska Enskilda Banken (SEB) has agreed to pay a $33mpenalty to resolve anti-money laundering (AML) compliance failures under a consent order with the New York State Department of Financial Services (DFS).
The settlement concludes the DFS investigation stemming from the 2016 Panama Papers leak, which uncovered oversight weaknesses within SEB’s Baltic operations between 2015 and 2019.
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The leak of confidential documents from law firm Mossack Fonseca prompted regulatory scrutiny of whether financial institutions connected to the firm had met their legal and compliance responsibilities concerning money laundering and offshore activity.
The DFS subsequently examined its licensees’ links to Mossack Fonseca, including SEB.
According to the investigation, SEB’s Bank Secrecy Act/Anti-Money Laundering (BSA/AML) programme contained “critical gaps”.
The findings included “inadequate customer due diligence” and a failure to establish controls to address the higher money laundering risk presented by high-risk clients, “notably exposing the New York market to this risk”.
The DFS also determined that SEB’s checks on high-risk correspondent banking partners, including foreign institutions, were insufficient.
The bank’s client files did not meet requirements, its AML risk calculations were inaccurate, and it did not revise the procedures used to manage correspondent bank relationships.
Separate findings concerned SEB’s transaction monitoring programme at its Baltic subsidiaries in Estonia, Latvia, and Lithuania.
The programme did not adequately identify or block suspicious activity.
Backlogs in the bank’s transaction monitoring systems delayed reviews of transactions for money laundering and sanctions risks, creating a risk that illicit transactions could be processed.
