Nordea Reaches Settlement With New York DFS Over Compliance Failures

Nordea Bank Abp has reached a settlement with the New York State Department of Financial Services (DFS) after the regulator determined that the bank had compliance failures and failed to conduct proper due diligence of its correspondent bank partners.

The bank entered into a consent order with DFS and agreed to pay $35 million in penalties, the DFS said in a Tuesday (Aug. 27) press release.

DFS investigated Nordea after the 2016 Panama Paper leak and found that the bank had anti-money laundering (AML) safeguards at its former Baltic branches that failed to adequately compensate for the increased risk level, failed to properly implement compliance initiatives, formed relationships with high-risk banking partners and had an inadequate transaction monitoring system, according to the release.

“International financial entities such as Nordea must safeguard against criminal activity in the global financial system, and for years Nordea failed in these respects,” New York Department of Financial Services Superintendent Adrienne A. Harris said in the release.

Nordea said in a Tuesday press release that it cooperated fully with the DFS investigation since 2019, that the DFS investigation covered the period from 2008 to 2019, and that the bank has taken “significant measures” to improve its financial crime processes and procedures.

The bank has invested 1.5 billion euros in risk and compliance since 2015, employs 3,400 people dedicated to combating money laundering and other financial crimes, and implemented more sophisticated prevention and detection techniques, per the release.

“As previously acknowledged, historically we underestimated the complexity of preventing financial crime and the resources needed for that purpose,” Jamie Graham, chief compliance officer at Nordea Group, said in the release. “In recent years we have invested heavily in our AML program, and the fight against financial crime is a key priority for Nordea.”

PYMNTS reported in 2019 that that Nordea and two other large Nordic banks — Swedbank AB and Danske Bank A/S — had to spend on new compliance systems and staff members after facing allegations of money laundering

The banks said at the time that investments in additional compliance staff and technology pushed quarterly expenses higher and would continue to do so in the months ahead.