Financial Crime World

Fintech Firms Warned of Regulatory Risks in Sweden

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Swedish Financial Regulator Issues Warnings on Marketing Language and Risk Transparency

Stockholm, Sweden - The Swedish financial regulator, the Swedish Financial Supervisory Authority (SFSA), has issued warnings to fintech companies operating in the country over regulatory risks. Specifically, the regulator is concerned about the use of unconditional language when marketing investment products and the need for transparency on risk levels.

Unconditional Language Warning

The SFSA report highlights that some fintech firms have been using terms such as “best” and “biggest” to describe their investment products without providing sufficient evidence to back up these claims. The regulator warns that this type of language can be misleading and may lead to consumer confusion.

Risk Transparency and Cryptoassets

The SFSA emphasizes the importance of clearly communicating the risks associated with investment products, particularly those involving cryptoassets such as cryptocurrencies and initial coin offerings (ICOs). The regulator states that investors should always be made aware of the potential risks involved in investing in these types of products.

Anti-Money Laundering Regulations

In addition to the warning on unconditional language, the SFSA has also highlighted the need for fintech firms to comply with anti-money laundering regulations. The regulator emphasizes that all activities involving virtual currencies and other digital assets must be subject to a registration requirement and comply with Swedish AML regime.

Distributed Ledger Technology and Blockchain

The report by the SFSA addresses the use of distributed ledger technology and blockchain, stating that there are no specific rules or guidelines in place governing their use. However, the regulator emphasizes that general rules and regulations, such as anti-money laundering (AML) regulations and consumer protection laws, must be complied with.

  • The SFSA has identified blockchain technology as an area of interest for the supervisor.
  • Rules and regulations on blockchain are expected to be adopted in the future.
  • If blockchain includes personal data, EU Regulation (EU) 2016/679 (General Data Protection Regulation) and Swedish data protection laws will apply.

Artificial Intelligence

The SFSA has also addressed the use of artificial intelligence in fintech, stating that there is no specific regulation governing automated investment advice. However, the regulator emphasizes that if artificial intelligence is used to make decisions based solely on automated processing of personal data, including profiling, this would be subject to the requirements in Article 22 of EU Regulation (EU) 2016/679.

Change of Control

The report by the SFSA highlights the need for fintech firms to comply with rules relating to notification and consent requirements when a regulated business changes control. The regulator emphasizes that consent from the SFSA is required when a legal or natural person intends to directly or indirectly acquire a qualified holding in a regulated business.

Financial Crime

The SFSA has emphasized the importance of anti-bribery and anti-money laundering procedures for fintech companies operating in the country. Companies licensed by or registered with the SFSA and a significant number of other firms must have procedures in place to combat bribery and money laundering, according to the report.

  • Failure to comply with these regulations can result in serious consequences, including fines and even criminal charges.

The SFSA will continue to monitor the market closely and take action against firms that fail to comply with regulations.