Sweden – Know Your Customer (KYC) Rules

 

 

While Sweden is not a regional financial center, revenue and suspicious transactions increased from 2009 to 2010. According to statistics from the Swedish Financial Police, the amount of suspected money laundering transactions totaled $1.2 billion in 2010 compared with $882.8 million in 2009.

Money laundering in Sweden occurs either through individuals who use the financial system to turn over illicit funds, or with the help of corporations that use financial system services. Money laundering is further facilitated by criminals having contacts or acquaintances within, or influence over corporations and actors within the financial system. Laundered money emanates from narcotics, tax fraud, economic crimes, robbery, and organized crime. Money laundering is concentrated primarily in large urban regions, such as Stockholm, and is frequently conducted over the internet, utilizing international money transfer services, gaming sites, and narcotics and illicit chemical vending sites. Suspicious transaction reports (STRs) generally do not reference serious organized crime, although it is a growing concern. Public corruption is not an issue in Sweden.

Sweden does not have an offshore financial center. Sweden provides no offshore banking, and does not readily attract foreign criminal proceeds as it does not have especially favorable banking regulations. There is not a significant market for smuggled goods in Sweden; however, the Swedish police consider the smuggling of bulk cash to be a problem. Sweden is a member of the European Union, and money is moved freely within the union. Sweden has foreign trade zones with bonded warehouses in the ports of Stockholm, Göteborg, Malmö, and Jönköping. Goods may be stored for an unlimited time in these zones without customs clearance, but they may not be consumed or sold on a retail basis. Permission may be granted to use these goods as materials for industrial operations within a free trade zone. The same tax and labor laws apply to foreign trade zones as to other workplaces in Sweden.

KNOW-YOUR-CUSTOMER (KYC) RULES:

 

Enhanced due diligence procedures for PEPs:

 

PEP is an abbreviation for Politically Exposed Person, a term that describes a person who has been entrusted with a prominent public function, or an individual who is closely related to such a person. The terms PEP, Politically Exposed Person and Senior Foreign Political Figure are often used interchangeably

    • Foreign PEP: YES
    • Domestic PEP: YES

Sweden – KYC covered entities

 

The following is a list of Know Your Customer entities covered by Swedish Law:

    • Banks
    • Insurance companies
    • Securities firms
    • Currency exchange houses, providers of electronic money, and money transfer companies
    • Accounting firms
    • Law firms and tax counselors
    • Casinos, gambling entities and lottery ticket sale outlets
    • Dealers of vehicles, art, antiques and jewelry
    • Real estate brokers

Sweden – Suspicious Transaction Reporting (STR) Requirements:

 

Number of STRs received and time frame: 12,218 in 2010

Number of CTRs received and time frame: Not applicable

The following is a list of STR covered entities covered by Swedish Law:

    • Independent certified public accountants
    • Tax advisors
    • Lawyers
    • Real estate agents
    • Casinos
    • Banks, life insurance and securities companies
    • Insurance brokers
    • Fund companies
    • Companies that issue electronic money
    • High value goods dealers

MONEY LAUNDERING CRIMINAL PROSECUTIONS/CONVICTIONS:

 

Prosecutions: Not Available
Convictions: Not Available

ENFORCEMENT AND IMPLEMENTATION ISSUES AND COMMENTS:

Swedish legislation dealing with money laundering exists in the Penal Code and the Money Laundering Act. In practice, predicate crimes are prosecuted, but not money laundering itself. Most often money laundering is prosecuted as tax evasion, if no other direct connection to crime is found. Many money laundering incidents involve self laundering, wherein a person tries to launder his own ill-gotten gains. In these cases only the predicate offense can be prosecuted, due to the lack of criminalization of self laundering in the Penal Code, even though it is defined as money laundering within the Money Laundering Act. The Money Laundering Act defines what is considered suspicious and should be reported to the Swedish Financial Intelligence Unit, rather than establishing criminal regulations.

The Swedish financial authority, Finansinspektionen, oversees compliance with current reporting regulations. It has the power to fine institutions and issue warnings, as well as to revoke licenses.

The FIU reports that STR filings reveal the most popular destinations for money leaving Sweden are Nigeria, Ghana, the UK, Iran, Russia, the Philippines, China, and Poland. Those countries most frequently named on STRs concerning money entering Sweden are China, Russia, the U.S., the U.A.E, Germany, Angola, Turkey, and Canada. According to the FIU, the significant increase in STR filings between 2009 and 2010 can partially be attributed to more banks utilizing detection systems for suspicious transactions, as well as an increase in the number of companies required to file reports. The biggest increase was in the credit market companies sector, which increased its STR rate from 51 in 2009 to 1,309 in 2010. STRs from remittance services also more than doubled from 1,749 reports in 2009 to 3,721 reports in 2010. Hawaladars are legally obligated to apply Swedish bookkeeping regulations.