The New York State Department of Financial Services imposed a USD 33 million penalty on Skandinaviska Enskilda Banken AB and its New York branch under a consent order resolving failures to comply with New York Banking Law and Bank Secrecy Act and anti-money laundering requirements. The investigation found critical weaknesses in customer due diligence, correspondent banking controls and transaction monitoring that exposed the New York market and the bank to heightened money laundering and sanctions risks. SEB failed to mitigate risks associated with high risk clients and adequately review high risk correspondent banking partners, including foreign institutions. Its client files were deficient, anti-money laundering risk was miscalculated, and procedures governing correspondent banking relationships were not kept current. Transaction monitoring systems at subsidiaries in Estonia, Latvia and Lithuania were also deficient and backlogged, allowing transactions to evade timely review for suspicious activity and sanctions risks. The investigation followed the 2016 Panama Papers leak, after which the department reviewed licensees’ connections to the Mossack Fonseca law firm, including SEB.
New York State Department of Financial Services fines SEB USD 33 million over anti-money laundering failures
The New York State Department of Financial Services fined SEB USD 33 million for anti-money laundering and New York Banking Law compliance failures. Deficiencies affected customer and correspondent bank due diligence, risk assessment and transaction monitoring at Baltic subsidiaries, exposing the New York market and the bank to money laundering and sanctions risks.