What State Street Corporation told the SEC could break it.

As a Federal Reserve-regulated bank holding company, State Street faces extensive, changing capital, credit, and liquidity regulation in the U.S. and abroad that can raise costs and compliance risk and constrain capital actions including share repurchases.

“Our business and capital-related activities, including common share repurchases, may be adversely affected by regulatory requirements and considerations, including capital, credit and liquidity; We face extensive and changing government regulation and supervision in the U.S. and non-U.S. jurisdictions in which we operate, which may increase our costs and compliance risks and may affect our business activities and strategies;”

Financial institutions have faced numerous AML and sanctions enforcement actions by regulators, state attorneys general, and the DOJ — some resulting in penalties including criminal penalties — a risk State Street faces given its global custody and payment footprint.

“There have been numerous enforcement actions by regulators, as well as state attorneys general and the U.S. Department of Justice, against financial institutions with respect to AML and sanctions laws and some have resulted in penalties, including criminal penalties.”

Sanctions programs can inhibit State Street's access to cash; at Dec 31, 2025 it held ~$2.4B (incl. $1.6B in Russia with its subcustodian, plus western European clearing agencies) in accounts subject to sanctions restrictions — up from ~$1.3B in 2024.

“For example, as of December 31, 2025 and 2024, we held such accounts in Russia that were subject to sanctions restrictions, inclusive of $ 1.6 billion and $ 0.8 billion, respectively, with our subcustodian, and with western European-based clearing agencies, for a total of approximately $ 2.4 billion and $ 1.3 billion, respectively.”

Outside the U.S., Canada, Germany, and the U.K., State Street depends on unaffiliated subcustodians in all jurisdictions where its clients invest — including emerging, underdeveloped, and sanctioned markets — exposing it to operational, reputational, and regulatory risk it cannot fully control.

“With the exception of the United States, Canada, Germany and the United Kingdom, we maintain subcustodian relationships in all jurisdictions in which our clients invest, including emerging and other underdeveloped markets, and markets subject to sanctions. Our use of unaffiliated subcustodians exposes us to operational, reputational and regulatory risk, as we are dependent upon the subcustodians in performing several of our services to clients in those markets.”