Estonia’s Financial Supervision Authority Fines LHV Pank €900,000 for AML/CFT Lapses
FSA Announces Fine Against LHV Pank
In a press release on Tuesday, Estonia’s Financial Supervision Authority (FSA) announced that it had fined LHV Pank €900,000 for shortcomings in its Anti-Money Laundering (AML) and Counter-Terrorism Financing (CFT) systems.
Findings of the FSA’s Inspection
The watchdog found that LHV, the largest private bank in Estonia, had failed to meet its obligations in the following areas:
- Establishing business relations and monitoring
- Data storage
Kilvar Kessler, head of the FSA, attributed the deficiencies and violations to the bank’s rapid growth in a high-risk environment.
Rapid Growth and Risk Management
Kessler expressed, “Banks experiencing rapid growth can find themselves in a situation where their risk management systems fail to keep up. Our supervision is meant to remind these institutions that risk management necessitates attention and investment.”
Concerns over Correspondent Banking Risks
The FSA expressed concern over LHV’s ability to manage additional risks created in correspondent banking. The authority conducted an on-the-spot check at the bank to assess its compliance with the law regarding its AML/CFT systems and rules.
Shortcomings in AML/CFT Controls and Business Relations Monitoring
The findings revealed shortcomings in LHV’s AML/CFT controls and business relations monitoring. In addition to the fine, the FSA issued an order requiring the bank to improve its risk control systems.
Bank’s Response and FSA’s Intentions
While commenting on the situation, Kessler stated that LHV is being cooperative and taking steps to correct the noted issues. The FSA expressed its intention to closely monitor the process.
Bank’s Commitment to Strict Adherence to Legislation
Despite the lapses, LHV maintained that it remains committed to strict adherence to all applicable legislation and regulations, including those related to AML/CFT. The FSA’s press release noted, “The FSA assessed whether the bank’s AML/CFT systems and rules were sufficient to manage additional risks in correspondent banking.”