Sweden’s Financial Watchdog Weighs In on Customer Risk Assessment

Stockholms Finansinspektionen Outlines Stance on Customer Risk Assessment

Finansinspektionen, Sweden’s financial regulatory authority, has provided guidance on customer risk assessment in the wake of the country’s adoption of the Fourth Money Laundering Directive. The directive requires financial institutions to assess the risk of money laundering and terrorist financing when taking on new customers.

Scope of Risk Assessment Determined by Size, Type, and Activities

The scope of this assessment should be determined by the size and type of undertaking, as well as the risks associated with its activities. Finansinspektionen emphasized that it will not issue regulations on factors that could indicate a low or high risk of money laundering and terrorist financing until ongoing work in the European Banking Authority (EBA), European Securities and Markets Authority (ESMA) and European Insurance and Occupational Pensions Authority (EIOPA) is complete.

Exceptions to Documented Risk Assessments to be Determined

The authority has also decided to wait before issuing regulations on exceptions to the requirement for documented risk assessments, citing a need to set high criteria for when such exceptions can be made. Finansinspektionen emphasized that even in cases where an assessment is not documented, the undertaking and relevant authorities will still need to determine whether procedures are sufficient and appropriate.

Importance of Internal Procedures

The report highlighted the importance of internal and common procedures for preventing money laundering and terrorist financing. These procedures should cover the group’s overarching policies and procedures for exchanging information within the organization.

Industry Associations Welcome Approach, Express Concerns

Industry associations have welcomed Finansinspektionen’s approach, with some calling for greater clarity on issues such as confidentiality and evaluation frequency. Insurance Sweden, however, has expressed concern that the procedures do not specify when information can be shared.

A Significant Step Forward in Implementing the Fourth Money Laundering Directive

The report is seen as a significant step forward in implementing the Fourth Money Laundering Directive in Sweden, which aims to strengthen measures against money laundering and terrorist financing.