Sweden Takes Aim at Money Laundering and Terrorism Financing: What You Need to Know

The Problem of Money Laundering in Sweden

Money laundering, a process of disguising illegal funds as legitimate income, is an international problem that has plagued Sweden for years. To combat this issue, the country’s anti-money laundering act aims to prevent the exploitation of banks for criminal activities by requiring financial institutions to assess the risk of money laundering and terrorism financing.

What is Money Laundering?

The law defines money laundering as trying to convert illegal funds into assets that can be reported openly. This often involves using the banking system to make it difficult to trace the source of the money. The organization of money laundering can range from simple to complex, involving multiple transactions and shell companies.

Combating Terrorism Financing

Terrorism financing is another serious concern in Sweden. Legal and illegal funds are used to finance terrorist activities, with the banking system playing a significant role in moving these funds. To combat this threat, Swedish law requires financial institutions to prevent money laundering and terrorism financing.

Requirements for Banks

The anti-money laundering act places high demands on banks to have good knowledge of their customers and understand the purpose of various transactions. This includes asking customers questions about the origin of their funds and how they plan to use them. Banks are also required to keep customer information confidential, subject to bank secrecy laws.

• New customers opening accounts or requesting services must provide valid identity documents and answer additional questions.
• Existing customers may be asked to present identification and supporting documentation when executing transactions or acquiring new services.
• Politically exposed persons (PEPs), including government officials and their family members, are also subject to increased scrutiny.

Requirements for Businesses

Businesses, including companies and professional firms, are required to identify their representatives and verify their authority to represent the company. Banks must also investigate ownership structures and relationships between individuals and companies.

• The law prohibits banks from performing services for customers who cannot provide valid identification or a satisfactory explanation of their activities.
• Failure to comply with the anti-money laundering act can result in penalties and sanctions imposed by the Swedish Financial Supervisory Authority.
• In cases where money laundering is suspected, banks must report this information to the police.

EU Regulation

In addition, an EU regulation requires financial institutions to request and keep information about payments, including cash deposits and transfers. This information helps track suspicious transactions and prevent illegal activities.

What You Need to Know

For more information on Sweden’s anti-money laundering act, consumers are advised to contact their bank or visit the Swedish Financial Supervisory Authority website.