New York Department of Financial Services (“DFS”) Superintendent Adrienne A. Harris announced today that Nordea Bank Abp (“Nordea” or the “Bank”) has agreed to pay $35 million in penalties as part of a Consent Order entered into with the New York State Department of Financial Services (the “Department”) for significant compliance failures with respect to Bank Secrecy Act/Anti-Money Laundering (“BSA/AML”) requirements and the Bank’s failure to conduct proper due diligence of its correspondent bank partners.
“International financial entities such as Nordea must safeguard against criminal activity in the global financial system, and for years Nordea failed in these respects,” said Superintendent Harris. “It is critical that such institutions maintain robust compliance programs and conduct proper due diligence of their customers and banking partners.”
In 2016, the Panama Papers leak exposed Nordea’s role in helping hundreds of its customers create tax-sheltered companies using offshore accounts. The activity at Nordea’s former branch in Vesterport, Denmark further implicated the Bank in the flow of illicit funds with entities connected to the Russian Laundromat, the Azerbaijani Laundromat, and the Hermitage Capital Allegations.
The Department’s subsequent investigation revealed that the Bank’s AML safeguards at its high-risk, former Baltic Branches, failed to adequately compensate for the increased risk level, leaving the Bank vulnerable to money laundering and the flow of suspicious transactions. Moreover, Nordea consistently failed to properly implement compliance initiatives, exposing the Bank to elevated financial crime risk. Compounding these weaknesses, the Bank formed relationships with high-risk banking partners, further exposing it to additional money laundering risks and making it possible for the Bank to facilitate financial crimes. The Department’s investigation additionally found that the Bank’s transaction monitoring system was inadequate, leading Nordea itself to acknowledge that its overall AML risk was “critical.”
The combination of deficient AML controls, an unsophisticated transaction monitoring apparatus, and a decentralized global compliance program created a set of circumstances that exposed Nordea’s financial channels to a high risk of criminal abuse. Nordea’s relationships with U.S. banks imported those risks to the New York financial system.
Read the Nordea Bank consent order.
