The Financial and Capital Market Commission of Latvia and Swedbank AS have reached a settlement by agreeing on future improvements to the bank’s internal control systems.

The agreement, which stipulates a fine of €1,361,954, is the result of an inspection performed by the FCMC. The penalty is lower than the maximum that the law allows because the bank has already 'voluntarily' begun to tidy the mess up. It also strengthened its compliance function, although the regulator does not make it explicit that this entailed an increase in its headcount. The monies will be transferred into the government budget.

During the inspection, the FCMC identified several infringements of the Law on the Prevention of Money Laundering and Terrorism Financing and its subordinate legislation. Swedbank, it says, was not paying enough attention to complex, inter-related transactions that had no apparent economic or visible lawful purpose. Moreover, the bank had not obtained documents and data on customers' economic or individual activities in due time.

Latvia's banking regulator has been conducting sweeping inspections at all Latvian-based banks in recent months.