Swedbank AB and its New York branch will pay a $50 million penalty after state regulators found the bank withheld information during an investigation connected to the Panama Papers leak. The New York State Department of Financial Services announced the consent order Thursday, saying Swedbank failed to fully cooperate with requests made under state banking law.
The department began reviewing financial institutions connected to Mossack Fonseca after the 2016 leak exposed millions of records from the law firm. Regulators issued two information requests over two years seeking details about Swedbank's relationships with the firm and related banks, institutions and individuals.
DFS found Swedbank's first response did not disclose exposure beyond its New York branch or acknowledge European regulatory inquiries. The department also said the bank withheld information about subsidiaries in Latvia, Lithuania and Estonia, including links between some customers and Mossack Fonseca.
Regulators said Swedbank did not disclose that customers of its Estonian subsidiary used Mossack Fonseca as a registered agent. The bank also failed to report that people named in the Panama Papers were customers or were associated with customers, according to the department.
The department said Swedbank continued to obscure information after a follow-up request. According to DFS, the bank gave the impression that it would search its Baltic subsidiaries for responsive records but intentionally excluded those subsidiaries from its production, preventing regulators from seeing numerous connections to Mossack Fonseca and adverse findings by European regulators.
DFS said bank employees acknowledged the omitted material should have been provided. Acting Superintendent Kaitlin Asrow said financial institutions are legally required to comply with state oversight and that the department would hold institutions accountable when they fail to meet those obligations.
The consent order resolves the department's investigation into Swedbank's compliance with New York banking law and its response to the information requests.
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