- Key insight: The settlement follows an investigation in which Swedbank withheld critical information about its extensive ties to the notorious 2016 Panama Papers leak.
- Supporting data: Swedbank deliberately excluded its Baltic subsidiaries from its responses to regulatory requests, leaving New York regulators in the dark about customers who were clients of a law firm at the center of the scandal.
- Expert quote: "Financial institutions have a legal obligation to comply with New York's laws and regulations designed to protect the integrity of the financial system." — New York State Department of Financial Services acting Superintendent Kaitlin Asrow
The New York State Department of Financial Services hit Swedish bank Swedbank with a $50 million fine for failing to turn over information about its extensive connections to the Panama Papers.
The agency said Thursday that Swedbank masked ties between its customers and Mossack Fonseca, a Panamanian law firm that specialized in offshore services. Mossack Fonseca was at the center of the 2016 Panama Papers scandal, which exposed a global network of offshore shell companies used by wealthy individuals to evade taxes and potentially facilitate criminal activity.
The leak was one of the most significant in history, involving roughly 11.5 million documents from Mossack Fonseca. It unmasked the financial secrets of politicians, billionaires and celebrities across more than 200 countries. New York regulators started looking into companies connected to the law firm in the scandal's wake.
Swedbank and its New York branch failed to produce "responsive information" when replying to multiple requests from NYSDFS, the regulator said.
"Financial institutions have a legal obligation to comply with New York's laws and regulations designed to protect the integrity of the financial system," acting Superintendent Kaitlin Asrow said in a press release.
The consent order comes nearly a decade after NYSDFS began its review of New York licensees connected to Mossack Fonseca. Swedbank allegedly withheld information related to its Baltic subsidiaries in Latvia, Lithuania and Estonia, and failed to tell NYSDFS that customers in Estonia were using Mossack Fonseca as a registered agent.
Back in 2019, a Swedish television station
"Swedbank was one of many global financial institutions mentioned in the leaked papers," the
"Critically, the leak shed light on the failure of global financial institutions to follow legal requirements designed to ensure that their customers are not engaged in or facilitating fraud, money laundering, or other criminal acts," the consent order states.
The intentional omissions of its global operations' involvement left New York regulators in the dark about people named in the Panama Papers, according to the consent order. NYSDFS determined that the bank deliberately excluded its Baltic subsidiaries and a Norway branch from its request for data.
The New York regulators claimed that Swedbank intentionally created a "false impression" in its communications, leading them to believe the bank was actively reviewing its Baltic operations, when it was not.
"Instead, the bank reported simply that, as a result of the release of the Panama Papers, [it] had reviewed the bank's risk assessment and risk management policies," the order states.
In fact, NYSDFS came to learn that Swedbank had issued three recommendations for improvements regarding its risk-assessment and risk-management policies, none of which Swedbank communicated to the New York regulator, according to the order.
Two attorneys for Swedbank did not immediately respond to requests for comment.
NYSDFS did not immediately respond to questions about why the matter was resolved nearly a decade after its initial inquiry.
