Financial Crime World

Title: Swedish Financial Regulator Cracks Down on Money Laundering Scandals: Strengthening AML/CFT Controls in Sweden

Sweden’s Reputation Under Threat: Money Laundering Scandals

Sweden, renowned as a reputable Nordic financial hub and EU member state, has been grappling with a series of high-profile money laundering scandals. In 2019, Swedbank, one of Sweden’s largest banks, was implicated in a $200 million money laundering scheme in its Eastern European and Russian branches, leading to a €360 million fine. In 2022, regulatory violations occurred at Swedish gambling companies Kindred, ATG, and Pinbet, resulting in immense fines totaling millions of Euros for each firm.

Combating Money Laundering and Terrorism Financing in Sweden

In order to reinforce its financial system against money laundering and terrorism financing threats, Sweden is fortifying its anti-money laundering (AML) and counter-financing of terrorism (CFT) regulations. The EU member state is pushing for a robust regulatory framework in the European Union (EU). Financial institutions in Sweden must keep abreast of the evolving AML/CFT landscape and requirements.

Swedish AML Regulator: Finansinspektionen

Established in 1991 as a merger of the Bank Inspectorate and the Insurance Supervision Authority, Finansinspektionen (FI) is Sweden’s Financial Supervisory Authority. Operating under the Swedish Ministry of Finance, the authority examines the financial risks and control systems of Swedish financial institutions to ensure compliance with statutes, ordinances, and other regulations. FI assesses the effectiveness of the country’s AML/CFT legislation and proposes amendments when necessary. Moreover, FI issues permits to companies intending to do business in Sweden and engages in financial education and public disclosure.

Key Sweden AML Regulations

Sweden’s primary AML/CFT legislation is embodied in the Money Laundering and Terrorist Financing (Prevention) Act, commonly known as the Anti-Money Laundering Act. The act dictates that firms must establish a risk-based AML/CFT compliance program, which involves evaluating individual customer risk levels and applying proportionate compliance measures. Additionally, firms need to monitor transactions for suspicious activity and report AML alerts to Sweden’s Financial Intelligence Unit (FIU).

Sweden also adheres to EU Anti-Money Laundering Directives (AMLDs), which are updated every few years. The most recent AMLD, 6AMLD, came into effect on 3 June 2021. Key features of 6AMLD include harmonized money laundering predicate offenses, increased minimum penalties for money laundering, and an expanded definition of money laundering to encompass aiding and abetting.

Sweden’s AML penalties for individuals reached €50 million in 2020, while prison sentences for the offense range from 6 months to 6 years.

How to Comply With Sweden’s AML Regulations

To comply with Sweden’s risk-based AML/CFT regulations, financial institutions must adopt the following measures:

  1. Customer Due Diligence (CDD): Collect and verify customers’ identifying information, including their Ultimate Beneficial Owners (UBOs) when applicable.
  2. Transaction Screening: Continuously monitor customers’ transactions for indicators of money laundering activity, such as transactions involving high-risk counterparties or jurisdictions.
  3. Sanctions and Watchlist Screening: Thoroughly screen customers against international sanctions lists, Politically Exposed Persons (PEP) lists, and other relevant financial crime watchlists.
  4. Adverse Media Screening: Monitor and analyze adverse media coverage of customers to proactively address emerging risks.

The EU’s 6AMLD mandates that firms implement adverse media screening as part of their AML/CFT compliance process, making it necessary for firms to use software capable of scanning global media sources – including print, web, and social media platforms.

Recent AML Initiatives in Sweden

Sweden advocates for the EU to adopt its latest AML/CFT proposals, such as a single rulebook and a centralized Anti-Money Laundering Authority. The European community has reached a consensus on these initiatives, though the location of the new authority remains undecided.

Sweden will also implement the EU’s Markets in Crypto-Assets (MiCA) regulation, a comprehensive regulatory framework for managing the risks posed by unbacked crypto-assets and stablecoins. MiCA is slated to come into force in 2024 and builds upon the Transfer of Funds Regulation, which extends AML/CFT reporting and record-keeping obligations to cryptocurrency service providers.

Staying Compliant in an Ever-Changing Landscape

Sweden’s AML/CFT landscape is constantly evolving, and financial institutions must stay informed and adapt to new risks and regulatory requirements. With Ripjar’s Labyrinth Screening platform, firms can perform comprehensive searches of thousands of structured and unstructured data sources, uncovering real-time financial insights and maintaining an up-to-date understanding of clients’ evolving risk profiles. Built on advanced machine learning technology, Labyrinth enables firms to extract the most relevant compliance data from a source in a matter of seconds. Equipped with this powerful new tool, financial institutions can swiftly react to new threats and remain compliant in Sweden and beyond.

If you’re interested in learning more about how Ripjar can support your AML compliance in Sweden, please contact us.