Sweden Needs to Improve Financial Crime Prevention Efforts, Says FATF Report
The Financial Action Task Force (FATF) has released a report assessing Sweden’s efforts to combat financial crime, highlighting both strengths and areas for improvement.
Strong Efforts, but Room for Improvement
While Sweden’s anti-money laundering (AML) and counter-terrorist financing (CFT) efforts are considered strong, the report finds that national policy coordination needs strengthening. The country faces significant money laundering risks due to its role as a regional financial hub and domestic crimes such as tax evasion.
Lack of National Coordination
Despite having a reasonable understanding of these risks, Sweden lacks a national AML/CFT coordination mechanism, which means different agencies do not share the same understanding or respond in a coordinated manner. This lack of coordination hinders the effective prevention of financial crime.
Combating Terrorist Financing
Sweden’s efforts to combat terrorist financing, particularly with regards to Islamic State (ISIL) and foreign terrorist fighters, are commended. Authorities prioritize combating terrorist financing and integrate this work with other counter-terrorism efforts. However, there are legal and practical weaknesses in Sweden’s implementation of targeted financial sanctions to freeze terrorist assets that must be addressed urgently.
International Cooperation
Sweden is commended for its strong international cooperation mechanisms, which enable effective law enforcement cooperation and pursuit of money laundering cases. The country’s new money laundering offence, introduced in 2014, has improved the potential for investigation and prosecution of money laundering activity.
IT Tools and Strategic Analysis
Financial intelligence is used systematically by Swedish authorities, but weak IT tools and a lack of strategic analysis mean that they are not yet utilizing its full potential in complex money laundering cases.
Supervisory System
Sweden’s AML/CFT supervisory system is in place, but there are weaknesses in applying risk-based supervision. Some financial institutions and designated non-financial businesses and professions (DNFBPs) require improvement in understanding the risks they face.
Conclusion
The report concludes that while Sweden has made significant progress in tackling financial crime, there are areas where further action is needed. The country’s authorities must strengthen national policy coordination, improve risk-based supervision, and update AML/CFT regulations to reflect the latest standards.
Key Recommendations:
- Strengthen national policy coordination
- Improve risk-based supervision
- Update AML/CFT regulations to reflect the latest standards
- Address legal and practical weaknesses in targeted financial sanctions
- Utilize financial intelligence more effectively in complex money laundering cases