Länsförsäkringar Bank recieves a remark and must pay an administrative fine

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.