Financial Crime World

Sweden’s Fintech Landscape: Navigating Regulatory Requirements

As fintech businesses expand into Sweden, they must navigate a complex regulatory landscape that is shaped by both EU and national laws. The country’s consumer protection legislation is particularly extensive, imposing stricter requirements than what foreign companies may be accustomed to.

Regulatory Compliance for Fintech Businesses

  • In addition to consumer protection laws, fintech businesses operating in Sweden must comply with:
    • Data privacy regulations
    • Cyber security standards
    • Anti-money laundering (AML) and financial crime prevention measures

Data Privacy

Sweden’s General Data Protection Regulation (GDPR) is directly applicable, supplemented by the Swedish Supplementary Provisions concerning the EU General Data Protection Regulation Act. The GDPR extends its territorial scope to organizations established outside the EU/EEA that offer goods or services to data subjects in the EU/EEA, or which monitor data subjects within the EU/EEA.

  • Sanctions for non-compliance include administrative fines of up to EUR 20 million or 4% of an undertaking’s worldwide turnover.
  • The GDPR also includes cyber security requirements, which fintech businesses must adhere to.

Cyber Security

Sweden has a range of regulations and guidelines in place to ensure the financial sector’s resilience against cyber threats. These include:

  • The EU’s NIS Directive, which will be replaced by the NIS 2 Directive in 2024.
  • The Digital Operational Resilience Act (DORA), which imposes requirements on risk management, incident response, and third-party risk management.

AML and Financial Crime Prevention

Sweden has a comprehensive AML framework, comprising:

  • The AML Act
  • The Penalties for Money Laundering Offences Act
  • The Penalties for Financing of Particularly Serious Crimes Act

Fintech businesses must:

  • Monitor transactions
  • Conduct customer due diligence
  • Report suspicious activities to comply with these requirements.

Other Regulatory Regimes

Fintech businesses may also be subject to other regulatory regimes, including those related to artificial intelligence (AI). The European Commission has proposed an AI Act, which is expected to have extraterritorial reach and impact the entire AI value chain. The act will introduce governance and transparency obligations on the development and use of AI systems.

Conclusion

Sweden’s fintech landscape is characterized by a complex regulatory environment that requires careful navigation. Fintech businesses must ensure compliance with data privacy, cyber security, AML, and financial crime prevention regulations to operate successfully in the country. As new legislative initiatives emerge, such as the AI Act, fintech companies must stay informed to maintain their competitive edge in the Swedish market.