Sweden Toughens Measures to Combat Money Laundering and Terrorist Financing

New Regulations Take Effect in Sweden

The Swedish government has introduced new regulations aimed at strengthening the country’s efforts to combat money laundering and terrorist financing. The new measures come into effect on August 1, 2017.

Enhanced Compliance Requirements

Under the revised regulations, financial institutions will be required to review their internal controls, risk management practices, and model risk management procedures. Independent audit functions will be responsible for reviewing these aspects to ensure compliance with anti-money laundering (AML) and counter-terrorism financing (CTF) regulations.

• Independent Audit Functions: Will review institutions’ internal controls, risk management practices, and model risk management procedures.
• Model Risk Management Procedures: Institutions must establish procedures for model risk management, including a description of the underlying theory and assumptions behind their models, as well as validation processes to ensure that models are fit for purpose.

Stricter Reporting Requirements

The new regulations also introduce stricter guidelines for reporting systems. Institutions will be required to:

• Safeguard Information: Ensure that information is safeguarded against unauthorized access, corruption, or destruction.
• Anonymous Reporting: Provide a means for anonymous reporting.
• Periodic Reports: Submit periodic reports to Finansinspektionen, Sweden’s financial supervisory authority, on their activities, risk assessments, customer due diligence procedures, monitoring and reporting, measures to maintain compliance with the rules, and employee training.

Enhanced Transparency and Accountability

The new regulations aim to enhance the effectiveness of Sweden’s AML/CTF regime and prevent the misuse of financial systems for illegal purposes. The move is seen as a significant step forward in the country’s efforts to combat money laundering and terrorist financing.

Key Highlights:

• Independent audit functions will review institutions’ internal controls, risk management practices, and model risk management procedures.
• Institutions must establish procedures for model risk management, including validation processes.
• Reporting systems must ensure information is safeguarded against unauthorized access, corruption, or destruction, and is accessible when needed.
• Financial institutions will be required to submit periodic reports to Finansinspektionen on their activities and compliance with AML/CTF regulations.

Effective Date: August 1, 2017