SWEDEN
Summary
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Sanctions

None

FAFT AML Deficient

No

Medium Risk Areas

Weakness in Government Legislation to combat Money Laundering

 

 

ANTI-MONEY LAUNDERING

 

FATF Status

Sweden is not on the FATF List of Countries that have been identified as having strategic AML deficiencies

 

Compliance with FATF Recommendations

The last Mutual Evaluation Report relating to the implementation of anti-money laundering and counter-terrorist financing standards in Sweden was undertaken by the Financial Action Task Force (FATF) in 2017. According to that Evaluation, Sweden was deemed Compliant for 9 and Largely Compliant for 21 of the FATF 40 Recommendations.

Key Findings

Sweden has a reasonable understanding of its ML/TF risks, but this is not consistent across authorities. Sweden does not have a national coordination body for AML/CFT at the policy level, which has a negative effect on Sweden’s effectiveness in other areas, including the understanding of risk across agencies.

Sweden’s implementation of targeted financial sanctions (TFS) against terrorist financing is ineffective, mainly because of serious technical deficiencies that are inherent within the framework of applicable EU regulations, and because of Sweden’s failure to propose or make designations itself. Sweden is not able to transpose TFS against proliferation financing without delay, but this is mitigated by other factors and has not had a practical effect on Sweden’s ability to properly comply with UNSCRs on proliferation.

Sweden prioritises international cooperation and has established highly effective mechanisms for providing it, including specific liaison mechanisms with Nordic and Baltic neighbours, EU cooperation instruments, and dedicated channels for operational cooperation with law enforcement authorities.

Sweden systematically collects and uses financial intelligence; however, the FIU has inadequate IT tools and its strategic analysis function is still being established. These deficiencies limit its ability to identify complex cases of money laundering and to provide risk information for other authorities and the private sector.

Authorities show a high degree of commitment and capacity to pursue ML and TF cases and to trace and confiscate the proceeds of crime. Prior to 2014 Sweden suffered problems with both its ML and TF offences. The new ML offence (introduced in 2014), and the new TF offence (introduced in 2016) have addressed these problems and have greatly improved the potential for investigation and prosecution of ML and TF, although authorities still need to build experience and precedents for applying the new offences in practice.

Sweden has a comprehensive supervisory system. Financial institutions and Designated Non-Financial Business and Professions (DNFBP) generally comply with their obligations, and have been subject to enforcement action when they do not. However, not all supervisors have a sufficient understanding of the risks to apply a risk-based approach effectively, and the FSA should increase its capacity, in order to conduct an appropriate number of AML/CFT-focused supervisory actions given the risk and size of Sweden’s financial sector.

Legal ownership and control is highly transparent in Sweden, and some beneficial ownership information is available. However, this is not sufficient to ensure that beneficial ownership information is available in all cases as such information is not collected systematically and not subject to adequate verification or sanctions.

Risks and General Situation

Sweden is an open economy that is located in the northern periphery of Europe. The economic system is characterised by a large proportion of card transactions, and consequently a small proportion of cash handling. Sweden is ranked by the IMF as one of 29 systemically important financial centres in the world, and has a large banking sector with assets amounting to about four times GDP. Sweden is also an important financial centre for the Nordic and Baltic regions.

Sweden is generally perceived as a safe country with low crime. Sweden ranks near the top of international indices for low corruption and strong rule of law. Tax crimes are the most significant predicate offence for money laundering identified in Sweden’s national risk assessment. Fraud is also identified as a major and growing concern. Both offences contribute a large part to the proceeds of organised crime in Sweden. The most significant criminal typology is tax fraud related to unregistered labour where, in order to bypass tax regulations, businesses pay undeclared cash wages. Some such schemes use corporate structures in Sweden and other countries, and false invoicing, to conceal the nature of the activity. Organised crime is also associated with smuggling, mainly of narcotics, performance enhancing drugs, cigarettes and arms.

Terrorism, and as a consequence terrorist financing, in Sweden is dominated by actors motivated by violent Islamic extremism, whose purpose is to promote or commit acts of violence in conflict areas such as Syria, Iraq, Afghanistan, Somalia and Yemen, or against Sweden or Swedish interests. The emergence of ISIL in Syria and Iraq transformed the terrorist threat in Sweden: between 2012 and 2015, approximately 300 Swedish residents had travelled to Syria to join ISIL, of which 40 have been confirmed deceased and 140 had returned to Sweden, where they constitute a new risk.

 

US Department of State Money Laundering assessment (INCSR)

Sweden was deemed a ‘Monitored’ Jurisdiction by the US Department of State 2016 International Narcotics Control Strategy Report (INCSR).

Key Findings from the report are as follows: -

 

Sweden is not a regional financial center. Money laundering in Sweden generally occurs through individuals who use the financial system to turn over illicit funds or with the help of corporations that use financial 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 sales of 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 organized crime, although it is a growing concern. Public corruption is not an issue in Sweden.

Sweden provides no offshore banking and does not readily attract foreign criminal proceeds. 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 EU, and money moves freely within the EU. 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 zone. The same tax and labor laws apply to the zones as to other workplaces in Sweden.

 

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SANCTIONS

There are no international sanctions currently in force against this country.

 

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BRIBERY & CORRUPTION

 

Index

Rating (100-Good / 0-Bad)

Transparency International Corruption Index

88

World Governance Indicator – Control of Corruption

99

 

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INVESTMENT CLIMATE - Executive Summary (US State Department)

Sweden is generally considered a favorable country in which to invest. Sweden offers an extremely competitive, largely corruption-free economy with access to new products, technologies, skills, and innovations. Having only 9.6 million people, Sweden is highly dependent on exports and is one of the most pro-free trade countries in the world. Sweden is the largest market in the Baltic Sea region and is the gateway to Northern Europe and the Baltic Sea region. Low levels of corporate tax, the absence of withholding tax on dividends, and a favorable holding company regime combine to make Sweden particularly attractive for doing business.

Combined with a well-educated labor force, outstanding telecommunications network, and a stable political environment, Sweden has become more competitive as a choice for American and foreign companies establishing a presence in the Nordic region. In the World Economic Forum’s 2013-2014 report, Sweden ranked sixth out of 144 countries in overall competiveness and productivity and has been in the top six for the past ten years.

Also in 2013, Transparency International ranked Sweden as one of the most corruption-free countries in the world; third out of 177. Sweden’s economy has strong potential to benefit from intensifying, technology-driven global competition. Sweden already hosts one of the most internationally integrated economies in the world. Large flows of trade, capital, and foreign investment attest to Sweden’s global competitiveness. It is seen as a frontrunner in adopting new technologies and setting new consumer trends. U.S. exporters can take advantage of a test market full of demanding customers and high levels of technical sophistication.

Surveys conducted by investors in recent years ranking the investment climate in Sweden show little variation in their appraisals: positives mentioned are a well-trained and educated workforce; low corporate tax rates; excellent infrastructure; and easy access to capital. On the negative side are the high cost of labor, rigid labor legislation, high individual tax rates, longer processing times and overall high costs in Sweden.