Financial Crime World

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Swedish Authorities Struggle with National Policy Coordination in Fight Against Financial Crime, Report Reveals

A recent assessment by the Financial Action Task Force (FATF) has highlighted that Sweden’s anti-money laundering and counter-terrorist financing regime is strong, but requires improvement in national policy coordination to tackle money laundering and terrorist financing risks.

Risks and Challenges

Sweden faces significant risks due to its role as a regional financial center and domestic crimes, particularly tax-related offenses. Despite being perceived as a low-crime country, Sweden’s authorities acknowledge the existence of money laundering risks, although their understanding is hindered by the lack of a national anti-money laundering (AML) and counter-terrorism financing (CFT) coordination mechanism.

Terrorist Financing Risks

The report also highlights Sweden’s terrorist financing risks, particularly those linked to ISIL and foreign terrorist fighters. Authorities have prioritized combating terrorist financing and integrated it with other counter-terrorism efforts, but there are legal and practical weaknesses in implementing targeted financial sanctions to freeze terrorist assets that need to be addressed urgently.

Strengths and Weaknesses

Sweden has made significant strides in international cooperation, with effective mechanisms for providing assistance and law enforcement cooperation being a particular strength. The country’s new money laundering offense, introduced in 2014, has improved the potential for investigation and prosecution of money laundering activity. However, it remains unclear whether criminal sentences are effective and dissuasive.

Financial Intelligence and Supervision

Financial intelligence is used systematically by Swedish authorities, but weak IT tools and a lack of strategic analysis hinder their ability to fully utilize financial intelligence to pursue complex cases of money laundering. The country’s AML/CFT supervisory system has all the necessary elements in place, but there are weaknesses in applying risk-based supervision.

Recommendations

The report concludes that large banks have made significant efforts to enhance AML/CFT compliance, while smaller financial institutions and designated non-financial businesses and professions (DNFBPs) require improved understanding of the risks they face. There are also several areas where Sweden’s AML/CFT regulations need to be updated to reflect the 2012 FATF standards.

Key Recommendations

  • Improve national policy coordination to tackle money laundering and terrorist financing risks
  • Enhance understanding of risks faced by smaller financial institutions and DNFBPs
  • Update AML/CFT regulations to reflect the 2012 FATF standards
  • Strengthen IT tools and strategic analysis for financial intelligence gathering and utilization