Financial Crime World

Sweden Establishes Internal Procedures to Prevent Money Laundering and Terrorist Financing

In an effort to comply with international standards, Sweden has established internal procedures for financial institutions to prevent money laundering and terrorist financing. These measures aim to meet most of the Financial Action Task Force (FATF) requirements.

AML/CTF Requirements for Financial Institutions

According to Finansinspektionen’s AML/CTF Regulations/Guidelines, all financial institutions subject to Swedish regulations are required to:

  • Designate an Anti-Money Laundering/Combating the Financing of Terrorism (AML/CTF) compliance officer
  • Implement screening procedures for employees
  • Maintain CDD record retention

The guidelines also cover:

  • Detection of unusual and suspicious transactions
  • Reporting obligations
  • Internal control systems

Financial institutions must:

  • Provide customer identification upon establishing business relations
  • Monitor all unusual, large transactions or transactions with no visible economic purpose
  • Maintain records for at least five years

Supervision and Enforcement

Finansinspektionen is responsible for licensing and supervising most financial institutions in Sweden. The agency conducts full supervision of licensed institutions, including:

  • On- and off-site inspections
  • Power to compel production of records and obtain access to all documents or information

The agency also has adequate powers of enforcement and sanction for failure to comply with AML/CTF requirements, including:

  • Criminal sanctions for tipping-off and failure to comply with STR requirements
  • Administrative sanctions, such as removal of a license or board member or managing director

Limitations in Supervision

However, there are limitations in supervision for registered financial institutions, which include:

  • Deposit companies
  • Money exchange businesses
  • Money remittance services

Finansinspektionen has no power to conduct on-site inspections, and the range of sanctions is more limited.

DNFBPs Under Scrutiny

Sweden’s AML Act, as revised in 2005, includes AML obligations for most categories of Designated Non-Financial Businesses and Professions (DNFBPs), including:

  • Casinos
  • Real estate agents
  • Dealers in precious metals and stones
  • Lawyers
  • Auditors

However, there are concerns regarding the scope of the Act, particularly with regard to company service providers and accountants.

Sweden is urged to bring DNFBPs under the scope of the CFT Act and develop adequate AML/CTF regulations for these sectors.

Efforts to Strengthen AML/CTF

In response to a FATF on-site inspection, Finansinspektionen has shifted its primary responsibility for AML/CTF issues to a new unit with three staff members. The agency will also provide support from the Prudential Supervision Department for AML/CTF on-site inspections.

Sweden’s efforts to strengthen its AML/CTF regime demonstrate its commitment to preventing money laundering and terrorist financing. The country is working to meet international standards, improve supervision, and increase transparency in the financial sector.