30 Jun 2020
Estonian banks need to develop and improve their Anti-Money Laundering (AML) processes, including by having smarter know-your-client systems, the Bank of Estonia says, following a €1 million the Financial Supervisory Authority (FSA) imposed on the Scandinavian-owned SEB Pank on Thursday. This would be made easier by legislative changes and more resources to state bodies fighting money laundering, the bank said.
“It is unfortunate that despite the efforts that banks in Estonia have made in recent years to deal more systematically with the risks of money laundering and terrorist financing than previously, the results are still not good enough. Money laundering has no place in Estonia”, said Bank of Estonia Deputy Governor Maive Rute, according to the central bank’s website.
SEB bank was fined €1 million for shortcomings in its AML practices. In its homeland of Sweden, the bank was also fined a little under €100 million, for the same reason. Tens of billions of euros in illicit funds have been thought to have passed through SEB in Estonia, something which came to light ahead of an investigative show on Swedish public broadcaster SVT in November 2019, which SEB addressed publicly, ahead of the program’s airing.
The Bank of Estonia says that the key solution lies in legislation to improve AML, as well as accompanying resources to the relevant authorities, to help them work effectively.
A major starting point was the June 17 implementation of EU AML directives into domestic law, the bank added. These changes will improve the quality of data relating to actual beneficial owners, will allow the banks’ international operations to be monitored better, and will make information exchange between the institutions concerned more efficient, the central bank says.
Maive Rute said that the FSA fine and accompanying precept would not affect the loans or deposits for SEB clients since the bank is well-capitalized, profitable, and has good liquidity, and the Estonian financial services sector as a whole is in a strong position.
Progress has also been made on AML and related issues so far, evidenced by the fact that only 1 percent of deposits in Estonian banks come from outside the eurozone nowadays. Most of the potentially illicit funds chaneled via SEB, as well as those via Swedbank (put at €135 billion in an earlier SVT broadcast in March 2019) and Danske Bank (around €160 billion, in the period 2007-2015; the bank has since closed its operations in Estonia), were from outside the EU, primarily the Russian Federation and other countries in the region.
Read more at ERR News
RiskScreen: Eliminating Financial Crime with Smart Technology
You can claim CPD minutes for this content, by signing up to our CPD WalletFREE CPD Wallet