Transaction monitoring insufficient for high-risk non-resident customers, authorities say
Branch banks in the Baltic states continue to cause problems for Nordic financial institutions. Sweden’s financial authority announced this week a $107.3 million fine for AML lapses at Baltic branches of Sweden’s Skandinaviska Enskilda Banken (SEB).
Swedish authorities cited problems with anti-money laundering governance and controls, especially pertaining to monitoring transactions and business relationships.
In a Wall Street Journal report, regulators noted that SEB’s Baltic branches serve a lot of non-resident customers, many of whom the bank classifies as high risk. Key risk factors include those associated with geographic concerns and with the nature of customer relationships.
Regulators have directed SEB to improve its transaction-monitoring processes in order to better identify high-risk activity. Authorities will review improvements to transaction monitoring after one year.
Both SEB and Swedbank have found themselves in the spotlight of AML Compliance investigations due to accusations of money laundering through their Baltic branches.
Investigations focused on relationships with non-resident clients–frequently Russians—who were alleged to be laundering vast sums into Europe via the Baltic branches in Estonia, Latvia, and Lithuania.
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