Länsförsäkringar Bank is issued a remark and must pay administrative fine

2022-12-14 | PRESS RELEASES MONEY LAUNDERING BANK

Länsförsäkringar Bank has been deficient in its work to prevent money laundering and terrorist financing. The bank is therefore being issued a remark and must pay an administrative fine of SEK 90 million.

Finansinspektionen (FI) has investigated whether Länsförsäkringar Bank has complied with the rules in the anti-money laundering regulations. According to these rules, the bank must monitor its ongoing business relationships and individual transactions and report any suspected money laundering and terrorist financing to the Swedish Police Authority.

The investigation shows that Länsförsäkringar Bank has been deficient in its compliance with the rules to identify deviant activities and transactions that could entail a risk that the bank was used for money laundering and terrorist financing. The bank is therefore being issued a remark and must pay an administrative fine of SEK 90 million.

In order to monitor its many transactions and customers, Länsförsäkringar Bank has used an automated system for transaction monitoring. However, this automated system has been deficient and, as a result, there have been risks that the bank may have been used for money laundering and terrorist financing.

“Large banks handle a large volume of transactions. This requires automated systems to identify suspicious transactions. It is not sufficient to only have one system – the system must also be adapted to the risks to which the operations are exposed and designed in such a way as to identify suspicious behaviour. This is where the bank has clearly failed in its important work to prevent money laundering and terrorist financing,” says FI’s Acting Director General Susanna Grufman.

The bank’s system for transaction monitoring has not considered the individual due diligence Länsförsäkringar Bank has conducted for each customer. The system has also not considered the customer’s risk class or all of the risks that bank has identified itself in its general risk assessment. This has impaired the bank’s possibilities for being able to identify deviant customer behaviour, stop suspicious transactions and report them to the Financial Intelligence Unit. Länsförsäkringar Bank also has not validated its model for transaction monitoring and has not had certain procedures and guidelines in place.

FI’s Board of Directors decided on the sanction on 13 December 2022

Finansinspektionen Press Release

Länsförsäkringar Bank recieves a remark and must pay an administrative fine

2022-12-14 | SANCTIONS MONEY LAUNDERING BANK

Länsförsäkringar Bank has been deficient in its compliance with the anti-money laundering regulations. Finansinspektionen is therefore issuing Länsförsäkringar Bank a remark that will be accompanied by an administrative fine of SEK 90 million.

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Summary

Länsförsäkringar Bank Aktiebolag (Länsförsäkringar Bank or the bank) has received authorisation from Finansinspektionen to conduct banking business in accordance with the Banking and Financing Business Act (2004:297). The bank is part of the Länsförsäkringar Group, where the bank in turn is part of a bank group.

Finansinspektionen has investigated whether Länsförsäkringar Bank has complied with the anti-money laundering rules on monitoring and reporting, particularly with regard to high-speed transactions and foreign payments.

The investigation shows that Länsförsäkringar Bank has been deficient in its compliance with the anti-money laundering regulations with regard to monitoring ongoing business relationships and individual transactions, model risk management, procedures and guidelines for model risk management and validation, and procedures and guidelines for monitoring.

The bank has an obligation to monitor ongoing business relationships and assess individual transactions to identify activities and transactions that deviate from normal customer patterns. A bank that has as large volume of transactions as Länsförsäkringar Bank, and as many customers, needs to have an automated system for transaction monitoring. The bank has had such a system, but in order for it be suitable and effective, it needs to be constructed to take into consideration the risks that the bank has identified in its general risk assessment, the due diligence the bank has of its customers, and the customers’ risk class.

The observed violations of the anti-money laundering regulations have primarily consisted of the bank not considering customer due diligence and the customer’s risk class in its automated transaction monitoring. The system has also not been designed to consider all of the risks the bank identified in its general risk assessment. Furthermore, the bank has not had procedures and guidelines in place for model risk management and validation, and it has not validated its model for transaction monitoring. The bank has also to some extent not had documented procedures and guidelines for its monitoring.

The violations are of such a nature that Finansinspektionen considers there to be grounds on which to intervene against the bank. However, the violations are not so serious that there are grounds on which to withdraw the bank’s authorisation or issue the bank a warning. Finansinspektionen is therefore issuing Länsförsäkringar Bank a remark that will be accompanied by an administrative fine of SEK 90 million.

Finansinspektionen Enforcement Action