SEB agrees to pay $33m penalty to New York State DFS

Swedish corporate bank Skandinaviska Enskilda Banken (SEB) and its New York branch have agreed to pay a $33 million penalty to the New York State Department of Financial Services (DFS) as part of a consent order to "resolve the Department's investigation into SEB’s compliance with New York Banking Law and anti-money laundering program failures", the regulator says.

SEB says the review specifically focused on "the bank's former procedures and processes for customer due diligence and transaction monitoring in its Baltic operations during the period 2015-2019".

In an announcement, the New York regulator says its investigation "revealed critical gaps in SEB’s Bank Secrecy Act/Anti-Money Laundering (BSA/AML) program, including inadequate customer due diligence and failure to implement strategies to mitigate heightened money laundering risk associated with high-risk clients, notably exposing the New York market to this risk".

Related:FCA grants Pliant UK EMI regulatory approval

New York State DFS also claims its investigation "found that SEB failed to adequately conduct due diligence on high-risk correspondent banking partners, including foreign institutions, had deficient client files, miscalculated AML risk, and failed to update procedures governing correspondent bank relationships".

Furthermore, the regulator adds that its investigation "found that SEB’s transaction monitoring program in its Baltic subsidiaries in Estonia, Latvia, and Lithuania was deficient in its ability to detect and block suspicious activity".

In a statement, SEB says: "DFS notes that SEB has cooperated throughout the investigation and recognises the measures SEB has taken to remediate the deficiencies identified in the consent order. SEB has accepted the terms of the resolution, thereby concluding the authority’s review.

"SEB’s ambition is, and has always been, to comply with applicable regulations and the bank's high internal standards. The bank’s former procedures and processes in the Baltics during 2015-2019 have previously been reviewed by local supervisory authorities, by SEB internally and have now also been reviewed by the DFS.

"SEB has implemented a range of measures during the relevant period and in subsequent years to strengthen its financial crime prevention. These measures include new policies, processes and controls, more advanced detection capabilities, enhanced employee training, and deeper cooperation with authorities and industry peers.

"A review by the DOJ has also been concluded, without the DOJ taking any action. With this, the US matters relating to the bank's historical anti-money laundering measures have been concluded."

Related:Visa lands PBOC approval to begin China card clearing business preparations

Cecilia Wolrath Ekenbäck, SEB’s head of group compliance, adds: "This chapter is now closed. 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."

SEB's penalty comes only a few months after fellow Swedish bank Swedbank agreed to pay a $50 million penalty as part of a consent order to resolve New York State DFS's "investigation into Swedbank’s compliance with New York Banking Law and its failure to cooperate fully with requests for information", the regulator said in announcing the settlement in July.

About the Author