Sweden is often seen as a country with a low crime rate. However, it faces the role of being a regional financial center and money laundering risks resulting from domestic crime, particularly tax crime. Similar to advanced financial centers, Sweden’s financial sector is also vulnerable to money laundering and terrorist financing, which encourages the country to improve its anti-money laundering (AML) compliance system. Despite this vulnerability, the number of reported money laundering crimes has fluctuated over the past few years.
Historical Background of AML
Sweden has been a member of the Financial Action Task Force (FATF) since 1990. In league with the FATF’s and the European Union’s guidelines over AML, the country enacted its first AML act in 1993, named the Swedish Act on Measures against Money Laundering. The act was amended and expanded over time to be more effective.
In 2014, the Act on Penalties for Money Laundering Offences was enacted to specify the criminal law framework for money laundering and terrorist financing. Furthermore, in 2017, the Money Laundering and Terrorist Financing Prevention Act was released as a comprehensive measure. The act aims to prevent companies from being used for money laundering and terrorist financing. As the administrative framework, it details what financial organizations are supposed to do in case of an issue of fraud.
Sweden is one of the most effective members of FATF. The country was deemed compliant with 14 Recommendations and largely compliant with 23 Recommendations for the 40 FATF Recommendations.
The Financial Regulator of Sweden
In Sweden, oversight of the financial sector is carried out by the Swedish Financial Supervisory Authority (SFSA). SFSA was established as a government agency in 1991. This regulatory body is entrusted with the responsibility of supervising financial institutions and markets to ensure their stability, efficiency, and ethical conduct, all while upholding the interests of consumers and investors.
The Fight Against Money Laundering in Sweden
Swedish authorities, including financial regulatory bodies and law enforcement agencies, have implemented a range of measures to combat money laundering effectively. These measures include robust Know Your Customer (KYC) procedures, enhanced due diligence (EDD) requirements, and improved information sharing among financial institutions. The Swedish government has also enacted legislation to align with international standards set by organizations like the FATF, ensuring a comprehensive legal framework to detect and prevent money laundering activities.
The SFSA is one of the key regulators against money laundering and terrorist financing attempts in Sweden. SFSA authorizes, supervises, and monitors all companies operating in the Swedish financial markets.
Another international organization that prevents money laundering is the FATF. Sweden is a member of FATF and tries to implement the standards published by FATF. The FATF regularly explains what risk factors specific regions have in money laundering.
The Effects of Being a Financial Center
The fight against money laundering and terrorist financing is a priority for the Swedish government. This work takes place globally, at the EU level and the national level. In Sweden, some law enforcement and administrative institutions have AML obligations in this area, with large parts of the private sector.
In the fight against money laundering and terrorist financing, you should consider the risks your business can use for money laundering or terrorist financing as an operator, which is called the general risk assessment. Based on the hazards assessed, routines and guidelines will be created.
An essential part of money laundering and terrorist financing work is to get to know their customers — to gain customer information before trading or entering business relationships. The scope of customer awareness measures is managed by your risk assessment of each customer relationship, called the customer’s risk profile.
Money Laundering Penalties in Sweden
For basic money laundering offenses, individuals found guilty can face imprisonment of up to two years. Gross money laundering offenses carry penalties ranging from a minimum of six months to a maximum of six years in prison. Petty money laundering offenses can result in fines or imprisonment for up to six months.
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