WHAT ARE THE
Money laundering and terrorism financing laws in Sweden?
In Sweden, money laundering and terrorism financing are regulated by several laws and regulations:
- The Swedish Penal Code: This law criminalizes the act of money laundering.
- The Act on Measures against Money Laundering and Terrorist Financing (2017:630): This law is the main legislation that outlines the obligations of different entities in preventing money laundering and terrorism financing.
- The Act (2016:1067) on Sanctions for Money Laundering Offenses: This law provides for the sanctions and punishments for money laundering offenses.
- The EU’s Sixth Anti-Mony Laundering Directive (AMLD6): As a member of the EU, Sweden is also subject to the regulations outlined in the AMLD6, which was implemented to prevent the use of the Union's financial system for money laundering and terrorist financing.
WHAT ARE THE
Key obligations reporting entities have under Swedish laws?
In Sweden, money laundering and terrorism financing are regulated by the Swedish Anti-Money Laundering Act (2017:630). Reporting entities such as financial institutions, payment institutions, electronic money institutions, fund management companies, and insurance companies are under the following obligations:
- Customer Due Diligence (CDD): Reporting entities are required to establish and verify the identity of their customers and, where necessary, the beneficial owners. This includes understanding the purpose and nature of the customer's business relationship.
- Risk Assessment: Reporting entities are expected to conduct risk assessments to identify, assess, and understand their money laundering and terrorism financing risks.
- Record Keeping: Entities must keep documents and information obtained through CDD measures, as well as transaction records, for at least five years after the end of the customer relationship or the completion of the transaction.
- Reporting Suspicious Transactions: If a reporting entity suspects or has reasonable grounds to suspect that funds are linked to criminal activity, they must promptly report this to Sweden's Financial Intelligence Unit (FIU).
- Internal Policies, Procedures, and Controls: Entities must develop, implement, and maintain internal policies, procedures, and controls to manage and mitigate their identified risks and to ensure compliance with AML/CTF laws.
- Staff Training: Entities must provide training to their staff to help them understand AML/CTF risks and how to manage them.
The Swedish Financial Supervisory Authority (Finansinspektionen) provides guidelines to help reporting entities fulfill these obligations
WHO ARE THE
ML/TF regulators in Sweden and what functions do they perform?
In Sweden, the regulation of money laundering and terrorism financing is primarily overseen by two main bodies:
- The Swedish Financial Supervisory Authority (Finansinspektionen): This is the main regulatory body responsible for the supervision of most reporting entities in the financial sector. It provides guidelines and conducts inspections to ensure compliance with the Anti-Money Laundering Act and other relevant regulations.
- The Financial Intelligence Unit (FIU) of Sweden: This unit is a part of the Swedish Police Authority. The FIU is responsible for receiving suspicious transaction reports from reporting entities and conducting further investigations as necessary. It plays a crucial role in the detection and prevention of money laundering and terrorism financing activities.
In addition to these, there are other supervisory authorities for certain categories of reporting entities. For example, the Swedish Gambling Authority supervises entities in the gambling sector, and the County Administrative Boards supervise estate agents and other operators in the property sector.
WHAT ARE THE
Industry sectors subject to ML/TF regulations?
In Sweden, the Anti-Money Laundering Act (2017:630) and related regulations apply to a wide range of industry sectors. These include, but are not limited to:
These sectors are required to implement anti-money laundering and counter-terrorism financing measures as stipulated by the law.
WHAT ARE THE
Penalties for non-compliance with AML/CTF laws?
In Sweden, non-compliance with the Anti-Money Laundering Act (2017:630) and other related laws and regulations can result in serious penalties. The exact nature and severity of the penalties depend on the nature of the violation and the entity involved, but they can include:
- Fines: A reporting entity that fails to comply with the laws may be subject to administrative fines. The amount of the fine will depend on the severity of the violation and the financial condition of the offending entity.
- Imprisonment: In severe cases, individuals responsible for serious violations can face imprisonment for up to two years.
- Revocation of License: The Swedish Financial Supervisory Authority (Finansinspektionen) may revoke the license of a regulated entity that fails to comply with AML/CTF laws, effectively barring them from operating in the financial sector.
- Warnings and Reprimands: The Finansinspektionen can issue warnings or reprimands, which can damage the reputation of the offending entity and lead to loss of business.
- Operational bans: Individuals who have committed serious violations may be banned from operating in certain roles within the financial sector.
The Swedish legal system allows for these penalties to be imposed separately or in conjunction with one another, depending on the circumstances of the violation.
WHAT ARE THE
Largest fines for non-compliance with AML/CTF laws?
The largest fines for non-compliance with AML/CTF laws in Sweden include:
- SEB Case (Sweden, 2020) - Skandinaviska Enskilda Banken AB (SEB) was fined 1 billion kronor by Sweden's financial regulator, Finansinspektionen, for inadequate identification of money laundering risks in its Baltic operations. Deficiencies were found in the bank's governance and control of anti-money laundering measures. Despite high risks in the Baltics, SEB was found to have under-resourced internal control functions and transaction monitoring. Additionally, SEB's Estonian unit was fined €1 million for violations of local anti-money laundering requirements.
- Swedbank Case (Stockholm, 2020) - On March 19, Swedbank was fined a record 4 billion Swedish crowns ($386 million) by the Swedish financial watchdog for shortcomings in its efforts to prevent money laundering. The bank acknowledged its failure to maintain the trust of customers, owners, and society, as stated by CEO Jens Henriksson. In response to the fine, Swedbank announced the initiation of a program to strengthen its measures against money laundering and address the shortcomings identified by the Financial Supervisory Authority.
- JAK Medlemsbank Case (Sweden) - The Swedish Financial Supervisory Authority, Finansinspektionen, found significant deficiencies in JAK Medlemsbank's compliance with anti-money laundering and counter-terrorism financing laws. The bank's general risk assessment and customer due diligence measures were found lacking, increasing the risk of illicit activities. Despite these violations, JAK has taken steps to rectify the issues. As a result, the bank was issued a remark and a fine of SEK 1.6 million.
These fines demonstrate the regulatory authorities' commitment to enforcing AML/CTF laws and holding financial institutions accountable for their compliance failures. The penalties imposed on these banks highlight the importance of robust anti-money laundering measures and the consequences of non-compliance.