Dive Brief:
- Stockholm, Sweden-based SEB and its sole New York branch agreed to pay $33 million to resolve an investigation into the lender’s anti-money laundering program, the New York Department of Financial Services said Thursday.
- The investigation stemmed from the Panama Papers data leak. The 2016 leak of 11.5 million financial and legal documents from Panama-based law firm Mossack Fonseca revealed that hundreds of banks failed to meet legal and compliance requirements, including obligations relating to money laundering and offshore activity.
- “Financial institutions must adhere to New York’s rigorous laws and regulations to safeguard the integrity of the financial system,” Acting NYDFS Superintendent Kaitlin Asrow said in a prepared statement. “The Department will hold entities accountable that fail to meet those standards.”
Dive Insight:
SEB is at least the, Sweden’s largest lender, is the fourth bank fined by the NYDFS in connection with the Panama Papers scandal. The regulator fined Taiwan’s Mega International Commercial Bank $180 million in 2016; Finland-based Nordea Bank $35 million in 2024; and fellow Swedish lender Swedbank $50 million in July.
Another bank, San Antonio, Texas-based USAA Federal Savings Bank, paid $140 million to the Financial Crimes Enforcement Network and the Office of the Comptroller of the Currency in 2022 for failing to flag suspicious activity linked to entities exposed by the Panama Papers.
The NYDFS investigation revealed that SEB’s Bank Secrecy Act/AML program inadequately performed customer due diligence and failed to address elevated money laundering risk associated with high-risk clients. The problems persisted between 2015 and 2019, according to a consent order issued by the agency.
The $370.2 billion-asset bank failed to conduct adequate due diligence on high-risk correspondent banking partners, including foreign institutions, kept insufficient client files, poorly calculated AML risk, and did not appropriately update procedures governing correspondent bank relationships, the agency said. Additionally, SEB’s transaction monitoring program in Estonia, Latvia and Lithuania was deficient in its ability to detect and block suspicious activity, according to the agency.
"This chapter is now closed,” Cecilia Wolrath Ekenbäck, SEB’s head of group compliance, said in a prepared statement Thursday. “The review is to a large extent based on the bank's own internal controls and conclusions regarding the former processes in the Baltics during the relevant period. Since then, SEB has implemented extensive measures to strengthen its resilience.
“That work will continue as risks in the external environment evolve,” she said.
The $33 million penalty will be recognized in the bank’s fourth-quarter operating expenses. The bank expects it to have limited financial impact, and its full-year cost target remains unchanged.
The consent order and penalty conclude historic AML issues with U.S. regulators and authorities, SEB said. The Justice Department, which was also conducting a review of the bank, wrapped up its investigation into the matter without penalty.
