Banks, Financial Services, Latvia, Law and Regulations, Security

She indicated that the FCMC and the bank have reached an administrative agreement on what needs to be done to improve the bank’s internal control system and deal with the issues identified by the FCMC. Under the agreement, Swedbank has to pay a EUR 1,361,954 fine, which is smaller than the maximum penalty that could be given under the existing laws, as the bank has already started work on the necessary improvements. The fine will be paid into the state budget, Auza said.

The FCMC found during an inspection that Swedbank was failing to comply with the law on the prevention of money laundering and terrorism financing and related legislative acts. The bank, for instance, had failed to pay the necessary attention to its clients’ complex mutual transactions that had no obvious economic or legal purpose. Furthermore, the bank had not obtained documents and information about its clients’ business or personal activities to make sure that their transactions could not be regarded as suspicious and thus did not ensure a sufficiently effective control system as required by the law on the prevention of money laundering and terrorism financing.

The credit institutions law would have allowed the FCMC to impose a fine in the size of 10 % of the bank’s annual turnover, but the FCMC reduced the fine, taking into consideration that Swedbank had started improving its control system on its own accord and that the bank had not been caught violating the law on the prevention of money laundering and terrorism financing previously.

Under the deal reached with the FCMC, Swedbank has also committed to refusing any further services to those non-resident clients that are posing risks of money laundering and terrorist financing. This is a limited group of legal entities, most of which have been registered in low-tax countries, Swedbank said.

“Swedbank takes the findings of the FCMC inspection very seriously and is determined to work hard to achieve our control system’s further improvement and deal with any flaws, as well as to collaborate closely with supervisory authorities,” Swedbank acting CEO Reinis Rubenis said in a statement to the press.

The bank said it was taking a number of measures in order to enhance its internal control systems by including specific areas that have been identified by the FCMC and that are part of the administrative settlement.

This year, the FCMC examined the effectiveness of Swedbank’s control system for the prevention of money laundering. The findings of that inspection revealed flaws in the bank’s control system, processes and documentation.

Swedbank is the largest bank in Latvia by assets.