Skandinaviska Enskilda Banken (SEB) has agreed to pay a $33 million penalty to settle an investigation by the New York State Department of Financial Services (DFS) into its anti-money laundering and transaction monitoring processes, the Swedish bank said on Thursday. DFS Acting Superintendent Kaitlin Asrow announced that SEB and its New York Branch will pay under a Consent Order.
The Consent Order resolves the department's investigation into SEB's compliance with New York Banking Law and failures in its anti-money laundering programme. SEB will recognise the cost in its fourth-quarter operating expenses and expects a limited financial impact, and its full-year cost target remains unchanged.
DFS FINDS GAPS IN CUSTOMER DUE DILIGENCE
“Financial institutions must adhere to New York’s rigorous laws and regulations to safeguard the integrity of the financial system,” said Asrow. DFS said its investigation revealed critical gaps in SEB’s Bank Secrecy Act/Anti-Money Laundering programme, including inadequate customer due diligence and a failure to implement strategies to mitigate the heightened money laundering risk associated with high-risk clients. This notably exposed the New York market to that risk, it said.
The department also found that SEB failed to adequately conduct due diligence on high-risk correspondent banking partners, including foreign institutions. It said the bank had deficient client files, miscalculated anti-money laundering risk and failed to update procedures governing correspondent bank relationships.
DFS further found that transaction monitoring in SEB’s Baltic subsidiaries in Estonia, Latvia and Lithuania was deficient in its ability to detect and block suspicious activity. The bank’s monitoring systems were backlogged, allowing transactions to evade timely review for money laundering and sanctions risks and exposing the bank to the risk of processing illicit transactions.
SEB'S RESPONSE AND THE US CLOSURE
SEB said it is implementing measures to strengthen its financial crime prevention, including new policies, better detection capabilities, enhanced employee training and deeper cooperation with authorities and industry peers.
The bank noted that the US Department of Justice has also concluded a review without taking any action. “With this, the U.S. matters relating to the bank's historical anti-money laundering measures have been concluded,” SEB said.
BALTIC SCRUTINY OF SWEDISH BANKS
For scale, SEB had total assets of SEK 3,759 billion and assets under management of SEK 2,664 billion at the end of 2024.
Related: SEB Named Jonas Ahlström Acting CEO After Johan Torgeby Resigned
Bank news that matters, every weekday.
Follow The Global Banker on LinkedIn