Anti-money laundering (AML) systems and internal rules at Estonian bank Luminor need improving, the financial supervisory authorities of all three Baltic States have found.
Estonia's financial supervisory authority, the Finantsinspektsioon, along with the the Financial and Capital Market Commission (Latvia) and Lietuvos bankas (Lithuania) had carried out an on-site inspection of Luminor AS in all three countries concurrently.
The inspectorates found Luminor needs to determine in its procedures relating to its IT facilities, plus structural units dealing with AML and anti-terror financing, BNS reports.
The bank's data quality also needs improving, as does its transaction monitoring system, the authorities say.
Luminor also needs to ensure timely and high-quality customer due diligence, plus sufficient resources to that end, the financial inspectors found.
Luminor responded by saying it is fully committed to preventing and detecting money laundering and financial crime.
The bank said: "We acknowledge the findings of the routine on-site inspection. The supervisors have highlighted areas of improvement within our internal processes and solutions, many of which we have already implemented and are committed to executing the remaining actions according to the plans we have submitted to supervisors."
"We have low risk appetite and our business model is targeted at serving predominantly residents of the Baltic countries, and customers who have a strong personal or business connection to the Baltic countries," the bank added in its statement.
"We review and improve our AML practices on an ongoing basis and are grateful to the supervisors for having carried out such a thorough inspection as such audits provide valuable input for the bank to enhance further its AML processes," Lumior continued.
The news follows high-profile cases in recent years involving the two largest banks in Estonia, the Swedish-owned SEB and Swedbank.
A report by Swedish public broadcaster SVT in early 2019 linked Swedbank in Estonia to the Danske money laundering case, where around €230 billion in potentially illicit funds passed through the portals of the now-defunct Danske Estonia, 2007-2015.
Last summer, SEB was been handed fines of €1 million relating to AML in Estonia, with the bank's parent company in Sweden fined a little under €100 million for the same reason.
Luminor AS has the right to appeal the Estonian body's decision at the second-tier Tallinn Administrative Court within 30 days of being notified, BNS reports.
Founded in 2017, Luminor is part-owned by Nordea and DNB, whose operations it superseded and who own 20 percent each, while the U.S.-based investment firm Blackstone Group holds the remaining 60 percent.
Editor: Andrew Whyte