Sweden Cracks Down on Money Laundering: New Regulations and Enhanced Scrutiny at Finansinspektionen

Sweden, known for its robust economy and EU membership, has faced a blow to its financial reputation in recent years due to high-profile money laundering schemes. In this article, we explore how Sweden is strengthening its financial system against money laundering and terrorist financing (ML/TF) through enhanced regulations and scrutiny by the Swedish Financial Supervisory Authority, Finansinspektionen (FI).

The Need for Tightened AML/CFT Controls in Sweden

Sweden has been hit by several money laundering scandals in recent years, leading to significant fines for financial institutions. For instance, Swedbank was implicated in a money laundering scandal worth over $200 million, resulting in a record-breaking €360 million fine [1]. More recently, online gambling companies Kindred, ATG, and Pinbet faced regulatory violations totaling millions of Euros [2].

To counter these trends, Sweden is reinforcing its anti-money laundering (AML) and counter-terrorist financing (CFT) controls. Finansinspektionen (FI), the Swedish Financial Supervisory Authority, is leading these efforts, ensuring that financial institutions comply with the latest AML/CFT regulations.

Finansinspektionen: Sweden’s AML Regulator

Established in 1991, Finansinspektionen is the primary financial regulatory body in Sweden, operating under the Swedish Ministry of Finance. Responsible for assessing financial institutions’ risks and control systems and enforcing compliance with legislation, Finansinspektionen makes regulatory amendments as necessary and guides firms on best practices [3].

Key Sweden AML Regulations

Sweden’s primary AML/CFT legislation is the Money Laundering and Terrorist Financing (Prevention) Act, nicknamed the Anti-Money Laundering Act [4]. This act mandates firms to implement risk-based compliance programs involving assessing customers’ risks and employing proportionate measures. Sweden also adheres to the European Union’s Anti-Money Laundering Directives (AMLD). The latest AMLD, 6AMLD, came into effect in 2021, introducing harmonized predicate offenses, enhanced penalties, and extended definitions of money laundering [5].

Penalties for Non-Compliance

Sweden imposes a €50 million penalty cap for money laundering offenses [6]. Individuals convicted of money laundering face prison sentences ranging from six months to six years [7].

Complying with Sweden’s AML Regulations

To adhere to Sweden’s risk-based AML/CFT regulations, firms must:

Perform customer due diligence (CDD), involving identifying customers and building comprehensive risk profiles.
Screen transactions for signs of ML activity.
Assess the risks of counterparties and jurisdictions.
Utilize sanctions and PEP lists to prevent financial transactions with prohibited entities and individuals.
Conduct adverse media screenings, now mandated by EU AMLDs, to identify customers with potential ML involvement or negative publicity [8].

Recent AML Initiatives in Sweden

The Swedish government advocates for a single EU AML/CFT Rulebook and a centralized Anti-Money Laundering Authority (AMLA), although the latter’s location is still under decision [9]. Sweden also plans to implement the European Union’s Markets in Crypto-Assets (MiCA) regulation in 2024, which involves managing unbacked crypto-assets and stablecoins, and expanding AML/CFT reporting obligations to cryptocurrency service providers [10].

Next-Generation AML solutions for Swedish Compliance

Given the evolving AML landscape and emerging threats requiring swift responses, Ripjar’s Labyrinth Screening platform offers a cutting-edge compliance advantage. By searching thousands of structured and unstructured data sources, including foreign news stories, sanctions lists, and watchlists, Labyrinth generates real-time financial intelligence [11]. Its advanced machine learning technology extracts the most relevant compliance data from a source in seconds, enabling firms to rapidly react to new threats and keep clients’ risk profiles up-to-date [12].

[1] The Local - Swedbank Settles Money Laundering Case for €2.3 Billion [2] Calvin Ayre - Kindred Settles Swedish Licensing Probe for €9.5m [3] Finansinspektionen - Brief Introduction [4] Government of Sweden - The Money Laundering and Terrorist Financing (Prevention) Act [5] European Parliament and European Council - EU Regulation on Combating Money Laundering and Terrorist Financing (6AMLD) [6] Swedish Penal Code - Aggravating Circumstances [7] Swedish Penal Code - Money Laundering [8] Finansinspektionen - Anti-Money Laundering and Counter-Terrorist Financing Compliance [9] Finansinspektionen - Government Bill: Bill 2022:41 - Prevention of Money Laundering and Terrorist Financing in the Financial Sector (Proposed New Act) [10] European Securities and Markets Authority - ESMA Consults on Amendments to the MiFIR Level 2 Regulation under MiCA [11] Ripjar - Labyrinth Screening Platform [12] Ripjar - Machine Learning & AI for Anti-Money Laundering and Fraud Detection