Estonia’s Financial Supervision Authority Imposes €900,000 Fine on LHV Pank for AML/CFT Lapses

The Estonian Financial Supervision Authority (FSA) has announced that it has imposed a €900,000 penalty on LHV Pank for failing to meet Anti-Money Laundering/Counter-Terrorism Financing (AML/CFT) requirements.

Breaches in AML/CFT Compliance

According to the FSA, LHV Pank, one of Estonia’s leading banks, fell short in the following areas:

1. Establishing and maintaining proper business relations
2. Monitoring
3. Data storage

Kilvar Kessler, the head of the FSA, explained, “Rapid growth in the payments sector can put significant pressure on banks to manage their risk effectively.” He suggested that LHV Pank’s quick expansion in a high-risk environment may have contributed to these deficiencies.

Regulatory Inspection and Findings

The FSA conducted a surprise inspection of AS LHV Pank to assess their AML/CFT procedures and internal rules when offering financial services to other institutions. During this on-site check, the FSA identified the following shortcomings:

• Ineffective monitoring of business relations
• Inadequate AML/CFT systems and rules to manage added risks in correspondent banking

Bank’s Response and Next Steps

LHV Pank has acknowledged the shortcomings and is cooperating with the FSA to remedy the situation. In a statement, the bank stated, “We are taking the necessary steps to rectify the deficiencies.”

The FSA will closely monitor the progress made by LHV Pank to ensure the necessary improvements are implemented.