New York State Department of Financial Services Secures $50 Million Penalty from Swedbank for Withholding Information from Investigators
Settlement Follows Department’s Investigation into Bank’s Relationships Related to the Panama Papers Leak
New York State Department of Financial Services (DFS) Acting Superintendent Kaitlin Asrow announced today that Swedbank AB and its New York branch (together, Swedbank or the Bank) have agreed to pay a $50 million penalty as part of a Consent Order to resolve the Department’s investigation into Swedbank’s compliance with New York Banking Law and its failure to cooperate fully with requests for information.
“Financial institutions have a legal obligation to comply with New York’s laws and regulations designed to protect the integrity of the financial system,” said Acting Superintendent Kaitlin Asrow. “The Department holds institutions accountable to ensure they meet their obligations and cooperate fully with the Department’s oversight.”
The 2016 Panama Papers leak of millions of Mossack Fonseca law firm records revealed the failure of financial institutions to meet legal and compliance obligations, including those relating to money laundering and offshore activity. The Department subsequently launched reviews of licensees connected to the law firm, including Swedbank.
Over the course of two years, DFS issued two information requests to Swedbank, seeking details about the Bank’s relationships with Mossack Fonseca and related banks, institutions, and individuals. Subsequently, DFS found that the Bank withheld critical information responsive to these requests. In response to DFS’s first request, DFS found that the Bank failed to report exposure beyond the New York branch, failed to acknowledge the existence of European regulatory inquiries, and withheld information relating to its Baltic subsidiaries in Latvia, Lithuania, and Estonia, including connections between certain customers and Mossack Fonseca. Moreover, DFS found that the Bank failed to alert the Department that customers of Swedbank Estonia used Mossack Fonseca as a registered agent and that individuals referenced in the Panama Papers leak were customers or associated with customers of Swedbank.
Additionally, Swedbank continued to obscure information in response to DFS’s follow-up request. The Department found that, in communications with DFS, Swedbank created a false impression that it would review its Baltic subsidiaries for responsive information. The Department subsequently found that the Bank intentionally excluded its Baltic subsidiaries from its production to the Department to avoid revealing Swedbank’s numerous connections to Mossack Fonseca and failed to disclose adverse findings by European regulators. Bank employees acknowledged this information should have been included in its production to the Department.
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