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Sweden’s Anti-Money Laundering and Counter-Terrorist Financing Measures Under Scrutiny

A recent report has highlighted significant gaps in Sweden’s anti-money laundering (AML) and counter-terrorist financing (CFT) policies, despite being a major step forward for the country. The strategy lacks national priorities to address specific money laundering and terrorist financing risks identified by Sweden’s National Risk Assessment.

Coordination Challenges

Sweden’s largest challenge is coordinating its complex structure of agencies involved in AML/CFT. Currently, there is no national coordination body, with responsibilities dispersed among many autonomous agencies. This has led to disconnects in the system, as individual agencies pursue their own priorities without sharing relevant risk information effectively.

Financial Intelligence and Investigations

Sweden systematically collects and uses financial intelligence to combat money laundering and terrorist financing. However, the authorities consider depriving criminals of their assets a highly dissuasive penalty and prioritize tracing and confiscating assets. While asset tracing investigations are generally effective, the lack of clear statistics on recovered assets makes it challenging to assess the impact of Sweden’s confiscation policies.

Terrorist Financing

Sweden prioritizes combating terrorist financing and has developed methods and capacity to pursue it. Financial investigations are conducted alongside all counter-terrorism cases, and authorities disrupt terrorist financing activity in cases where a conviction cannot be obtained. However, Sweden has only prosecuted a small number of terrorist financing cases due to the difficulty of successfully conducting prosecutions under the old offence.

Targeted Financial Sanctions

Sweden’s implementation of targeted financial sanctions against terrorist financing is ineffective, mainly due to serious technical deficiencies inherent in EU regulations and failure to use mechanisms to propose or make designations. The country has no mechanism to use targeted financial sanctions at a national level in response to terrorist threats affecting Sweden.

Non-Profit Organizations

Sweden has a solid and effective framework of measures to prevent the misuse of non-profit organizations (NPOs). While there is limited formal oversight, strong self-regulatory initiatives and voluntary engagement with government agencies ensure rigorous oversight of NPOs accounting for a significant portion of financial resources under control of the sector.

Conclusion

Overall, while Sweden’s AML/CFT policies have made progress, they still face significant challenges in terms of coordination, financial intelligence, investigations, and targeted financial sanctions. The country must address these gaps to effectively combat money laundering and terrorist financing threats.