Skyrocketing Financial Crime: A Threat to Sweden’s Economy and Trust in Payment Systems

Sweden’s economy and financial institutions face growing challenges as financial crimes, particularly fraud, rise at alarming rates. According to the Swedish National Council for Crime Prevention, fraud is the fastest-growing crime category in 2023, with an unprecedented 44% increase in card fraud and fraud via social engineering (Figure 10).

Figure 10: Card Fraud and Social Engineering Fraud on the Rise

The troubling trend is illustrated in Figure 10, which shows reported offense numbers by crime type and year. Note that the statistics for 2023 are still preliminary. For access to the data, click on the arrow to the right of the diagram [Data download icon]. Source: Swedish National Council for Crime Prevention.

A Silent Threat: Social Engineering

Social engineering fraud, which includes scams by telephone and text messages, is a common strategy used by criminals to trick unsuspecting victims. Elderly individuals are often targeted, with fraudsters posing as bank representatives or requiring them to disclose sensitive information through BankID or even sign documents. Text message scams also run rampant. A survey by the Swedish Bankers’ Association revealed that over half the population has received fraudulent text messages, with approximately 1% resulting in completed frauds.

Combatting Social Engineering: Initiatives by Banks and Authorities

Banks and authorities are taking several steps to mitigate the impact of social engineering fraud:

• The Swedish Bankers’ Association, in collaboration with banks, launched the ‘Difficult to Swindle’ initiative to raise public awareness about the risks of social engineering and steps individuals can take to safeguard themselves against such schemes.
• Banks have also submitted several petitions to the Swedish Government in 2023 to counteract social engineering fraud, including the introduction of a fraudster register and regulations to curb mobile and telephone number manipulation, also known as spoofing.
• Nordea took an additional measure by introducing savings accounts with delayed withdrawals to make it more challenging for criminals to initiate unauthorized transactions.

A Priority for the Swedish Government

Financially motivated criminal activities are a significant concern for the Swedish Government as well. In October 2022, Finansinspektionen was assigned the task of assessing how payment service providers work to prevent fraud. Later, in December 2022, the Swedish Post and Telecom Authority was tasked with addressing spoofing to impede fraudulent activities. The findings from both assessments are due for presentation on May 31, 2024. Furthermore, in February 2023, a meeting was held between the heads of Sweden’s largest banks and the Government to strengthen collaboration and cooperation between financial institutions and law enforcement to prevent fraud targeting the elderly.

Card Fraud: A Cybersecurity Concern

Strong customer authentication requirements for card payments, as mandated by the EU, have significantly contributed to a decline in reported card fraud. However, an increase in card fraud in 2022 and 2023 (Figure 10) is mainly attributed to online fraud where criminals have stolen card details but not the physical card, allowing them to conduct transactions in countries with weaker authentication requirements.

To protect against online card fraud, consumers can:

• Temporarily close their cards for online transactions and activate them when needed to shop online.
• Enable two-factor or multi-factor authentication for online accounts where possible.

Counterfeit Banknotes on the Decline

While the number of counterfeit banknotes reported to the Swedish police has decreased from a historic high of 6,629 in 2020 to 2,179 in 2023, these copies are relatively unsophisticated and easy to differentiate from genuine banknotes due to Swedish banknotes’ advanced security features. However, as fewer individuals in Sweden rely on cash, awareness of genuine banknotes’ appearance and feel is diminishing, raising concerns that counterfeit banknotes might more easily be passed off as authentic. Despite this, the Riksbank advocates for continued acceptance of cash to protect consumer privacy and, in light of the counterfeit concerns, suggests implementing amount limits to maintain this balance without unwittingly fueling the criminal economy.