Wednesday, October 21, 2020

SEB bank faces dual investigations of its anti-money laundering controls

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The Estonian Financial Supervisory Authority (FI) and the Swedish Financial Supervisory Authority, are investigating whether SEB’s mechanisms to prevent money laundering suspected transactions have been sufficient.

Following the announcement by SEB Bank on Friday that Swedish broadcaster SVT is making a program on money laundering in the Baltics and SEB, the Financial Supervision Authority has announced that it is reviewing the bank’s organizational structure and suspicious transactions. The same is being done by the Swedish Financial Supervisory Authority for SEB Sweden.

The two organizations are cooperating and coordinating their activities and the results will be published early next year.

According to the law, every bank is obliged to inform the Financial Supervisory Authority of transactions suspected of money laundering. The latter, by law, has the power to assess transactions more accurately and to decide on the next steps. The Financial Supervisory Authority does not conduct criminal proceedings and is not a competent investigative body, it emphasized.

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The Financial Supervision Authority’s general risk assessment report said the majority of riskier transactions by non-residents brokered by Estonian banks took place earlier. For example, the share of non-residents in Estonian banks’ deposits has fallen significantly since 2014, from 20 percent to around 10 percent , primarily from around 8 percent to 0.4 percent in offshore areas.

At the end of 2018 and early 2019, the Financial Supervision Authority carried out extraordinary anti-money laundering checks in all banks operating in Estonia and branches of foreign banks operating in Estonia.

The Inspectorate checked the application of due diligence measures at 16 banks. The audit assessed how the bank identifies the risks associated with its business activities, the risks the bank takes (risk appetite, business strategy), how the bank’s control systems are reflected, and the bank’s customer portfolio, particularly in the high-risk business area.

The authority said the risks related to servicing non-residents in Estonian banking have decreased significantly. Most of the bank’s business is not exposed to a money laundering risk and in 2019 services will be mainly focused on local (or related) business and private clients, government and non-profit sectors.

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