Swedish Banks Take Tough Stance Against Money Laundering
Swedish banks have implemented strict regulations to combat money laundering and financing terrorism, as part of the country’s efforts to prevent exploitation by criminal organizations.
The Problem of Money Laundering
Money laundering involves converting illegally obtained funds into legitimate assets, often linked to crimes such as drug trafficking, people smuggling, tax evasion, robbery, fraud, arms trading, and bribery. Criminals frequently use the banking system to conceal the source of these illegal funds.
Swedish Regulations
The Anti-Money Laundering Act, based on the EU’s Fourth Money Laundering Directive, requires all financial businesses in Sweden to assess the risk of exploitation for money laundering and terrorist financing. To fulfill this obligation, Swedish banks must:
- Have a good understanding of their customers and transactions
- Verify customer identities when opening an account or making large transactions
- Ask questions about the purpose and origin of funds
- Request documentation, such as contracts or invoices, to support customer explanations
Businesses Beyond Financial Sector
The law also places strict demands on businesses and professionals beyond the financial sector, such as:
- Accountants
- Lawyers
- Estate agents
- Gaming companies
These entities are required to report any suspicious activities.
Banks Must Ask Questions
Under the Anti-Money Laundering Act, banks must ask questions about the purpose of a transaction, the origin of the funds, and how they will be used. In certain cases, banks may also request documentation to support customer explanations. For new customers, banks must:
- Verify identity
- Check for links to politically exposed persons (PEPs)
Current customers are required to provide identification documents upon request.
Penalties for Non-Compliance
If a customer is unable to provide valid identification or provide a satisfactory explanation for the purpose of a transaction, the bank may refuse to perform the service. Failure to comply with the law can result in:
- Penalties
- Sanctions imposed by the Swedish Financial Supervisory Authority
- Reporting of suspicious activity to the police
Further Information
For more information on Sweden’s Anti-Money Laundering Act, customers are encouraged to contact their bank directly.