Financial Crime World

title: “Sweden’s Strict KYC Regulations: Identity Verification and Beyond”

Introduction

Sweden’s stringent Know Your Customer (KYC) procedures are a cornerstone of its robust financial system. This article explores the intricacies of the Swedish KYC process, including identity verification, beneficial ownership, and enhanced due diligence measures.

Identity Verification for Domestic and International Clients

Domestic Clients

To onboard domestic persons, a Swedish National ID card or a passport is typically required.

International Clients

International clients must submit identity documents such as a passport and official registration documents for corporate entities. The identity of their representatives must also be verified using approved identification documents.

Beneficial Ownership and Enhanced Due Diligence

  • Sweden requires identification of those who control more than 25% of shares or exert significant influence (beneficial owners).
  • Enhanced due diligence measures are mandatory when establishing a business relationship or when a single transaction is carried out at a distance.
  • Politically Exposed Persons (PEPs) residing abroad necessitate these enhanced measures.
  • Correspondent banking relationships with foreign financial institutions call for additional scrutiny.

KYC for PEPs

Sweden only establishes business relationships or conducts single transactions with PEPs when the relationship is motivated by a low risk of money laundering or terrorist financing.

  • Document the controls of each institution
  • Gather sufficient information
  • Obtain internal approval to proceed
  • Ensure the bank undertakes KYC procedures for their clients

Sweden’s AML Regime and Compliance

Sweden has a comprehensive AML regime, including the 2009:62 Money Laundering and Terrorist Financing (Prevention) Act and regulations.

Reporting Requirements

Submission of Suspicious Activity Reports (SARs) to the Financial Intelligence Unit (Finanspolisen).

  • No de-minimis thresholds for transactions below which they do not need to be reported.
  • Penalties for non-compliance with reporting requirements can be severe.

Digital Identity Verification

Sweden uses digital signatures more stringently, with qualified electronic signatures being the only accepted forms. They must utilize a digital certificate issued by a qualified service provider.

Conclusion

Sweden’s KYC regulations are comprehensive and robust, requiring various identification documents, a focus on beneficial ownership, adherence to a risk-based approach, and thorough assessments for PEPs and correspondent banking relationships.