New York Fines Swedbank $50 Million for Hiding Panama Papers Ties

Swedbank settled New York State Department of Financial Services ("NYDFS") claims that it misled the regulator by hiding information about its connections to the Panama Papers.

Swedbank agreed to pay a $50 million penalty and may not deduct it on its taxes or seek insurance for it. The NYDFS stated that Swedbank must cooperate, going forward, and that it would not act further on this conduct if the bank complies.

The matter began with the 2016 Panama Papers leak from the law firm Mossack Fonseca exposing offshore shell companies used to hide money, evade taxes, and dodge sanctions. Swedbank was named in the files and the NYDFS asked Swedbank about its ties to Mossack Fonseca. Swedbank's New York branch replied with a single page saying it had no connections. However, the bank's headquarters already knew that customers of its Baltic subsidiaries in Estonia, Latvia, and Lithuania had used Mossack Fonseca, the NYDFS claimed. Swedbank had left that out based on the view that the information request covered only the New York branch, according to the regulator.

In 2018, NYDFS asked Swedbank about its global operations. Swedbank's lawyers told the NYDFS the bank would search those operations. The bank's Chief Compliance Officer excluded the Baltic subsidiaries because they were involved with Mossack Fonseca, writing in an internal email: "That's why I wanted to remove them out of the scope."  Swedbank also told the NYDFS that a review by European regulators had ended without adverse findings when in reality the regulators had issued to the bank three recommendations for improving its risk-assessment and risk-management policies, according to the NYDFS.

The NYDFS learned of the hidden Baltic information through media reports in early 2019. Later that year, Swedbank turned over the first set of substantive documents relating to the Baltic subsidiaries.