Financial Crime World

Sweden’s Crackdown on Financial Crime: Tighter AML/CFT Rules and Regulatory Framework

Sweden, known for its prosperous Nordic economy and EU membership, has recently faced reputational damage due to high-profile money laundering scandals. In this article, we will discuss how Sweden is strengthening its anti-money laundering (AML) and counter-financing of terrorism (CFT) controls and advocating for a more robust EU-wide regulatory framework.

Money Laundering Scandals in Sweden

  • Swedbank admitted to a $200 million money laundering scheme in its Eastern European and Russian branches (2019), leading to a massive €360 million fine.
  • Swedish gambling companies Kindred, ATG, and Pinbet were fined millions of Euros for money laundering regulatory violations (2022).

Sweden is taking action to fight back against financial crime and safeguard its financial system’s integrity. As a result, it is essential for companies to familiarize themselves with Swedish AML/CFT obligations.

Sweden’s AML Regulator: Finansinspektionen

Sweden’s Financial Supervisory Authority, Finansinspektionen (FI), was established in 1991 by merging the Bank Inspectorate and the Insurance Supervision Authority.

Responsibilities of Finansinspektionen:

  • Overseeing financial institutions’ risks and control systems
  • Ensuring compliance with statutes, ordinances, and other regulations
  • Assessing the legislation’s effectiveness and recommending changes
  • Issuing permits to businesses
  • Disclosing financial information
  • Collaborating with international partners to aid investigations

Key Sweden AML Regulations

Sweden’s primary AML/CFT legislation is the Money Laundering and Terrorist Financing (Prevention) Act, also known as the Anti-Money Laundering Act.

Requirements under the Anti-Money Laundering Act:

  • Implement a risk-based AML/CFT compliance program
  • Assess individual customers’ risks and implement appropriate measures
  • Monitor transactions for suspicious activity and report alerts to the Financial Intelligence Unit (FIU)

Sweden aligns with EU Anti-Money Laundering Directives (AMLD), such as the Sixth Anti-Money Laundering Directive (6AMLD), which harmonizes money laundering predicate offenses, increases minimum penalties for money laundering, and expands the definition of money laundering.

AML/CFT Penalties and Compliance

In 2020, the maximum penalty for money laundering in Sweden was €50 million. There are potential prison sentences ranging from 6 months to 6 years for individuals found guilty.

Compliance Obligations

To comply with Sweden’s risk-based AML/CFT regulations, firms must implement:

  1. Customer due diligence (CDD)
    • Identity verification
    • Ultimate beneficial ownership information
  2. Transaction screening
  3. Sanctions and watchlist screening
  4. Adverse media screening

Recent AML Initiatives in Sweden

The Swedish government advocates for EU adoption of its latest AML/CFT proposals, including the introduction of a single AML/CFT Rulebook and a centralized Anti-Money Laundering Authority (AMLA).

Sweden will also implement the EU’s Markets in Crypto-Assets (MiCA) regulation in 2024, which extends AML/CFT reporting and record-keeping obligations to cryptocurrency service providers.

Next Generation AML Screening in Sweden

Amidst evolving risks and regulatory requirements, Ripjar’s Labyrinth Screening platform offers Swedish financial institutions an effective compliance solution. With advanced machine learning technology, Labyrinth quickly extracts relevant compliance data, ensuring firms can react swiftly to new threats and changing client risk profiles. Contact us to discuss how Ripjar can assist your Swedish AML compliance.