Financial Crime Prevention Methods in Sweden Need Improvement, Says Report

Sweden is known for its low crime rate, but it still faces significant money laundering and terrorist financing risks. A recent report by the Financial Action Task Force (FATF) assesses that while Sweden’s anti-money laundering (AML) and counter-terrorism financing (CTF) regime is strong, there are areas where improvement is needed.

National Policy Coordination

The FATF assessment found that Swedish authorities have a reasonable understanding of the risks they face, but there is a lack of national coordination in AML/CTF policy. Different authorities do not share the same understanding of the risks or respond to them in a coordinated way. This highlights the need for better national policy coordination.

Terrorist Financing Risks

Sweden also faces terrorist financing risks, particularly associated with ISIL and foreign terrorist fighters. The country prioritizes combating terrorist financing and integrates this with other counter-terrorism work, but there are legal and practical weaknesses in its implementation of targeted financial sanctions to freeze terrorist assets that need urgent attention.

Positive Developments

On the positive side, Sweden has established effective mechanisms for international cooperation, particularly in law enforcement. The country’s new money laundering offence, introduced in 2014, has improved the potential for investigating and prosecuting money laundering activity. Authorities have shown commitment and effectiveness in pursuing such cases, although it is unclear whether criminal sentences are effective and dissuasive.

Efficient Asset Tracing

Sweden also efficiently traces criminals’ assets and considers confiscation a highly dissuasive penalty. Financial intelligence is used systematically, but weaknesses in IT tools and lack of strategic analysis mean that authorities are not yet using the full potential of financial intelligence to pursue complex cases of money laundering.

Supervisory System

The report notes that while all elements of Sweden’s AML/CTF supervisory system are in place, there are weaknesses in applying risk-based supervision. Financial institutions’ and designated non-financial businesses’ and professions’ compliance with their obligations is generally adequate, but there is a need to improve smaller financial institutions’ and DNFBPs’ understanding of the risks they face.

Conclusion

The report concludes that Sweden’s AML/CTF regulations should be updated to reflect the 2012 FATF standards in several areas. This highlights the importance of continuous improvement and cooperation between authorities, financial institutions, and other stakeholders to effectively prevent financial crime and protect the integrity of the financial system.