Banks, EU – Baltic States, Financial Services, Legislation

The watchdog launched the investigation after Swedish broadcaster SVT alleged in November that a number of accounts at SEB in Estonia were held in names that should have alerted the bank to the risk it could be being used for money laundering.

"SEB has not identified the risks of money laundering in its Baltic operations sufficiently well and has had faults in its governance and controls," the Financial Supervisory Authority (FSA) said in a statement on Thursday.

The fine is the second biggest ever doled out by the watchdog, after rival Swedbank was hit with a 4 billion crown charge in March, also for lax compliance with anti-money laundering regulations in the Baltics.

SEB said it would now analyze the decision.

Agnese Strazda, a spokeswoman for Latvia's SEB Banka, told LETA that the Financial and Capital Market Commission (FCMC) completed its inspection into SEB Banka's compliance already at the end of 2019, which resulted in fining the bank with EUR 672,684 for breaches of anti-money laundering and terrorism and proliferation financing prevention rules. A fine of EUR 1,121,140 was imposed on the bank for breaching international sanctions.

Strazda said that the Lithuanian financial supervision authority completed its inquiry last week without imposing any sanctions. The Estonian financial supervision authority completed the audit today, finding no systemic violations on SEB Bank's part in Estonia. "The supervisory authorities did not conclude that SEB Bank has been systematically used for money laundering or fraud. It has been indicated that work must continue to improve data quality and collection of customer data," said Strazda.

The inspections showed that the bank is not being systematically used for money-laundering, but that there are certain areas that have to improved. It was also concluded that SEB Bank has managed to introduce the necessary control mechanisms and on the whole has been law abiding. "Enhancing the system of client and transaction monitoring will be one of the bank's main priorities also in the future - the bank will increase not only its technical resources but also supervisory human resources," Strazda said, adding that Latvia's SEB Banka has already implemented most of the improvements recommended by the FCMC.

FCMC spokeswoman Dace Jansone told LETA that the FCMC has been closely working with the financial supervisory authorities of Sweden and Estonia, providing information at the FCMC's disposal, including about the last onsite inspection into SEB Banka, which was finished in December 2019, the administrative agreement concluded with the bank and the EUR 1.79 million fine. 

"The bank worked out a plan of measures to deal with the shortcomings identified during the 2017 inspection and to improve the internal control system for the prevention of money laundering and terrorism financing. As it set the amount of the fine, the FCMC took into consideration that Latvia's SEB Banka had already implemented the majority of improvements," said Jansone. "Supervisory work has been continuing all this time and the FCMC has stayed in touch with SEB Banka and the Swedish and Baltic bank supervisors. All the information received is thoroughly assessed and decisions are made about the necessary further supervisory measures," Jansone said.