Financial Crime World

Money Laundering: A Hidden Epidemic in Sweden’s Financial System and Global Implications

In the shadowy world of international finance, money laundering has emerged as a significant challenge for Sweden and the global community. Over the last decade, money laundering has gained increased attention, prompting stringent measures to be introduced to combat the criminal activity both in Sweden and internationally. In this article, we delve into the complexity of money laundering, examining its definition, prevalence in Sweden, and common techniques, as well as outlining how SRS, a leading security company, supports banks and businesses in investigating potential cases.

What is Money Laundering?

Money laundering is an intricate process designed to transform illegitimate funds, referred to as ‘dirty money,’ into legitimate assets. Dirty money can take two forms:

  • Proceeds from criminal activities
  • Untaxed income obtained legitimately

According to the Swedish Financial Supervisory Authority, it is believed that SEK 130 billion is laundered annually through Sweden’s banking system. Globally, the United Nations Office on Drugs and Crime (UNODC) estimates that money laundering amounts to between 715 billion and 1.87 trillion each year.

Awareness and Increased Scrutiny

The recognition of the money laundering threat has grown, with Sweden and the European Union leading the charge for international cooperation. Since the adoption of the new law on penalties for money laundering offenses in 2014, Sweden has seen a dramatic increase in reports of such crimes.

International Efforts

  • Fourth and Fifth Anti-Money Laundering Directives by the European Union
  • Influence of US and UK anti-corruption and bribery legislations

As a result, banks and financial institutions worldwide have faced escalating scrutiny, with approximately $36 billion in fines imposed over the past decade.

Modes of Money Laundering

Money laundering is typically conducted in three phases:

  1. Placement: Dirty money is introduced into the financial system through less stringent financial partners.
  2. Layering: The illicit funds are masked by intertwining them with legitimate means, often through intricate transaction chains or investments.
  3. Integration: The laundered money is extracted from the system through methods such as dividends, bank withdrawals, or sales.

Common Money Laundering Techniques in Sweden

Though methods continue to evolve, certain money laundering techniques have been prevalent in Sweden:

  1. Money laundering through multiple bank accounts: Depositing small sums of money into various accounts and transferring funds to foreign banks is a well-established method.
  2. Money laundering in gambling activities: Horse racing and casinos have historically been vulnerable to money laundering activities. Criminals deposit funds into gambling accounts and later withdraw laundered money, with the expansion of online gambling options intensifying the exploitation.
  3. Money laundering via real estate investments: Real estate investments have long served as a lucrative vehicle for money laundering. Despite being closely regulated in Sweden, criminals can invest in international markets for discreet transactions and potentially substantial returns.
  4. Money laundering through foreign banks: Transferring large amounts of money into complex chains of offshore accounts, with the use of bank cards for purchases, is a formidable method for laundering and tax evasion.

SRS: Supporting Banks and Businesses in combating Money Laundering

The security company SRS works closely with banks and businesses to identify and investigate potential money laundering and privacy concerns. SRS offers Enhanced Due Diligence (EDD) and Integrity Due Diligence (IDD) services, assisting customers with specific inquiries that cannot be addressed through conventional Know Your Customer processes. Potential areas of concern include:

  • The authentication of Source of Wealth documents
  • Discrepancies in income narratives
  • Insights into corruption issues in specific industries or jurisdictions

With extensive experience and a broad network throughout the Nordic region, Europe, Asia, Africa, and the Middle East, SRS can help strengthen your anti-money laundering framework through its investigative services. Contact SRS to learn more about how we can support your organization in combatting money laundering activities.