Sweden
Report on the Observance of Standards and Codes: FATF Recommendations for Anti-Money Laundering and Combating the Financing of Terrorism

This report reviews the Observance of Standards and Codes on the Financial Action Task Force (FATF) Recommendations for Anti-Money Laundering and Combating the Financing of Terrorism (AML/CFT) for Sweden. The findings suggest that overall, the Swedish legal requirements in place to combat money laundering and terrorist financing are generally comprehensive. Penalties for money laundering are low, generally charges for predicate offences are pursued, and there have been a limited number of convictions for the money laundering offence.

Abstract

This report reviews the Observance of Standards and Codes on the Financial Action Task Force (FATF) Recommendations for Anti-Money Laundering and Combating the Financing of Terrorism (AML/CFT) for Sweden. The findings suggest that overall, the Swedish legal requirements in place to combat money laundering and terrorist financing are generally comprehensive. Penalties for money laundering are low, generally charges for predicate offences are pursued, and there have been a limited number of convictions for the money laundering offence.

1. Background Information

1. This Report on the Observance of Standards and Codes for the FATF 40 + 9 Recommendations for Anti-Money Laundering and Combating the Financing of Terrorism was prepared by the Financial Action Task Force (FATF). This report provides a summary1 of the AML/CFT measures in place in Sweden as of September 2005 (the date of the on-site visit). The report describes and analyses those measures and provides recommendations on how certain aspects of the system could be strengthened. The views expressed in this document are the views of the FATF, but do not necessarily reflect the views of the Boards of the IMF or World Bank.

2. Overall, the Swedish legal requirements in place to combat money laundering and terrorist financing are generally comprehensive; however, the evaluation team had concerns about the system’s effectiveness. Penalties for money laundering are low, generally charges for predicate offences are pursued (due to the fact that in Sweden self-laundering is co-punished with the predicate offence), and there have been a limited number of convictions for the money laundering offence. The terrorist financing offence is generally broad, although it does not specifically cover collecting/providing funds for a terrorist organisation or individual terrorist. Still, the legislation has been shown to be effective since it has been used to convict two individuals. The FIU functions, powers, and processes are generally satisfactory, but would be improved if additional resources were allocated, there were less reliance on manual processes, and limitations on the timeframes allowed to keep suspicious transaction reports were removed. Measures for international co-operation are generally comprehensive.

3. Basic customer identification measures are in place, but there is a need to adopt comprehensive customer due diligence requirements. Record-keeping measures are largely comprehensive. The scope of the suspicious transaction reporting requirements is generally sufficient; however, there were significant concerns regarding the effectiveness of the system. The supervisory powers including the power to issue sanctions are generally broad; however, powers should be expanded with regard to registered financial institutions (money exchange and remittance companies and deposit companies). At the time of the on-site visit, there were other concerns about the overall effectiveness of the supervisor system—i.e., the need for additional resources and the current focus on larger financial institutions. Basic AML/CFT measures apply to most DNFBPs; however, there are also concerns regarding how effectively they are implemented, and more comprehensive measures need to be adopted.

4. The Swedish National Economic Crimes Bureau has estimated that the yearly proceeds of crime in Sweden are approximately 130 billion SEK2. The information gained from suspicious transaction reports (STRs) and from investigations indicates that the main predicate offences are drug crimes, smuggling and illegal trade of alcohol and tobacco, theft, fraud, document forgery, receiving, human trafficking, violation of the Firearms Act, bribery, dishonesty to creditors, violation of the Companies Act, tax and VAT evasions crime and bookkeeping crimes.

5. Money laundering operations are increasingly performed through more complex techniques, by individuals or groups that are connected to organised crime in Sweden and its international counterparts. Identified money laundering is mostly performed through banks, money exchange offices (bureaux de change) and money remitters. A relatively sophisticated method of money laundering technique involves the use of bank accounts abroad. Credit cards are connected to these accounts; the cards may be used in Sweden for cash withdrawals through ATMs and for credit card purchases.

6. Swedish authorities report that the financing of terrorism has not so far been a major problem in Sweden. The few active groups found use different methods for acquiring money. Intelligence indicates that the few groups and persons in Sweden that fit into the extremist category are largely self-supporting, i.e. do not receive funding from abroad. Intelligence also indicates that some of these groups engage in various types of fraud and also seem to acquire funds from theft or fraudulent behaviour in shops, as well as through fundraising through individual donors. Money collected from fundraising seems mostly to be deposited into accounts in the conventional banking system and forwarded in larger lots, making it more difficult to link money from a particular fundraising campaign to terrorism. In October 2005, two individuals were convicted under the Swedish counter terrorist financing legislation.

7. A wide range of financial institutions exists in Sweden, including credit institutions (banks and credit market undertakings), insurance companies and brokers, securities companies, investment companies, deposit companies, money exchange and money transfer businesses. A range of designated non-financial businesses and professions became subject to the AML Act as of 1 January 2005: casinos, real estate agents, dealers in precious metals and stones, lawyers and auditors. Company service providers exist in Sweden but are not subject to the AML Act. Sweden is currently in the process of further reviewing its legislation for the purposes of implementing the third EU Money Laundering Directive.

2. Legal System and Related Institutional Measures

8. Money laundering is criminalised through sections 6, 6a, 7 and 7a of Chapter 9 of the Swedish Penal Code on receiving and money receiving. The basic money receiving offence covers the mandatory physical elements required by the Vienna and Palermo Conventions. Sweden has adopted an “all crimes” approach to the criminalisation of money laundering, and the penal code and other criminal laws cover the designated categories of offences (as defined in the Glossary of the FATF 40 Recommendations), although participation in an organised criminal group is not a specific criminal offence. While conspiracy applies for the aggravated offences of many crimes in the Swedish Penal Code (e.g. murder, kidnapping, robbery), it is not clear if conspiracy applies to the full range of profit-generating activities in which criminal groups engage. Sweden’s receiving/money receiving offence does not apply to persons who commit the predicate offence if the predicate offence can be proven (i.e. self-laundering). In such cases, receiving/money receiving is “co-punished” with the predicate offence in the way that the punishment for the predicate offence also covers the activity covered by the receiving/money receiving offences. Such activity might lead the predicate offence being considered to be an aggravated offence or could otherwise result in higher penalties. The Supreme Court has ruled that self-laundering is not separately punishable under current Swedish Law. However, it did not indicate whether self-laundering would be contrary to the Constitution or another fundamental principle of Swedish law. Therefore, the evaluation team could not confirm that this was a fundamental principle according to FATF standards. The principle does not prevent a perpetrator being convicted of money receiving when that person cannot, due to lack of evidence, be convicted of the predicate offence.

9. The ancillary offence of “complicity” (which covers investigation, aiding and abetting, facilitation, and counselling the commission) is applicable to the money receiving offences. However, conspiracy, attempt, and preparation apply only in the more serious cases of money laundering (“gross money receiving/money receiving”) and not to the general offences. The evaluation team recommends that these minor technical weaknesses be remedied.

10. It appeared that there are limited numbers of convictions (for money receiving) since the inception of the anti-money laundering regime in 1999, and the assessment team was concerned about the limited focus on money laundering and proceeds of crime issues. One reason appears to be the understanding that the offence of money receiving is encompassed within and ancillary to the predicate offence. Penalties that have been provided for the money laundering convictions have also been low.

11. Sweden’s criminalisation of terrorist financing is largely in line with international standards—in particular, with the Terrorist Financing Convention—yet it does not cover all the requirements of Special Recommendation II. Sweden should amend its legislation to ensure that the offence specifically covers collecting or providing of funds in the knowledge that they are to be used (for any purpose) by a terrorist organisation or an individual terrorist without the need to demonstrate intent to commit a terrorist act. The current penalty for the basic offence is a maximum of two years imprisonment. If an act that constitutes terrorist financing also constitutes another offence under the Penal Code or the Act on responsibility for Terrorist Offences subject to the same or more severe penalties, this offence should be applied, which could lead to penalties up to life imprisonment. Despite this, authorities should provide higher penalties for the specific offence of terrorist financing, which would more properly take into account the grave nature of the offence.

12. Rules on forfeiture are found in the Chapter 36 of the Penal Code and in special penal laws. The provisions provide for criminal confiscation of the proceeds of any crime with a penalty of at least one year (which covers money laundering offences), property of corresponding value, instrumentalities used in or intended for use in the commission of the offence, as well as property that is derived directly or indirectly from proceeds of crime.

13. There are also provisional measures to prevent dealing in property possibly subject to confiscation. “Provisional attachment” generally prevents such dealing, though the need to demonstrate a reasonable cause that the property will be removed is a limitation. Rules on seizure are comprehensive and can be applied explicitly for instrumentalities and implicitly for proceeds. No specific data on forfeiture from receiving and money receiving offences was available, nor on freezing/seizing property. However, general data on the total amount forfeited annually showed a declining amount forfeited over the past three years.

14. As in other European Union countries, Sweden’s obligations to freeze terrorist assets are derived from Common Positions adopted by the European Union, and their resulting EU Council Regulations. The obligation to freeze under S/RES/1267(1999) has been implemented through Council Regulation (EC) No 881/2002. Annex I to the Regulation contains the same information as the list maintained by the Al-Qaida and Taliban Sanctions Committee; and the Annex is regularly and promptly updated. On 13 November 2001, the assets of the Swedish citizens and the entities listed under this mechanism were immediately frozen (an amount of 1,070,000 SEK), although two citizens were later de-listed, and their assets were returned.

15. Sweden’s obligation to freeze under S/RES/1373(2001) is implemented through Council Regulation (EC) No. 2580/2001. Article 2 of this Regulation contains an obligation to freeze and a prohibition on making any funds available to the group targeted by the Regulation. The targeted group is determined by the Council acting by unanimity. The EU Regulation does not allow for the freezing of funds and other assets of EU internals. Sweden should implement a national mechanism to supplement the EU Regulation in order to give effect to requests for freezing assets and designations from other jurisdictions and to enable freezing the funds of European citizens/residents.

16. The Swedish financial intelligence unit (FIU), Finanspolisen, is one of the intelligence units of the National Criminal Police within the National Police Board. The FIU was established in 1994 and has been a member of the Egmont Group since 1995. The total number of the STRs received has been around 10,000 per year, with most of the STRs forwarded to the FIU by fax, although at the time of the on-site visit the government was developing a new electronic system for receiving and analysing STRs. The FIU staff is well qualified and has a wide range of previous police experience; however, the current number of staff (16) is not adequate and should be increased.

17. The FIU submits two kinds of reports to investigative agencies: Operative Reports (ORs) indicate a specific crime conducted by specific natural persons; and Intelligence Reports (IRs) indicate an event or a possible crime performed by known or unknown natural persons. In 2004, the FIU sent 139 ORs and 846 IRs, to National Police, County Police Authorities, or the Economic Crimes Bureau.

18. The FIU provides reporting parties with specific reporting forms, although it does not provide other guidance. The FIU also publishes an annual report that includes statistics, recent money laundering trends and techniques, and information regarding the FIU’s activities. The FIU informs reporting parties when a preliminary investigation based on an STR is opened and when a sentence based on one of these cases is pronounced.

19. There are significant limitations regarding the timeframe that the FIU may store the STRs. To retain STRs for more than six months, the FIU staff must first make a determination on every incoming STR that some suspicion of money laundering exists. After being stored, STRs must then be deleted after 3 years unless the FIU has received supplementary STRs and/or background information. These timeframes reduce the effectiveness of the FIU and should be remedied.

20. The National Police Board (NPB) is the central administrative and supervisory authority of the police service. The NBP is responsible for the development of new work methods and technological support. The NPB has two operative branches: The Swedish Security Service (Säkerhetspolisen -SÄPO) is responsible for protection of sensitive objects, counter-espionage, anti-terrorist activities and protection of the constitution. In the fight against threats to national security, the national Security Service conducts investigations, provides intelligence, resources and methodological know-how. The National Criminal Police (Rikskriminalpolisen - RKP) provides investigation and criminal intelligence support in cases involving crimes with worldwide or international ramifications, but also works at the local level of the police organisation, providing reinforcement for police authorities as required.

21. The National Economic Crimes Bureau (Ekobrottsmyndigheten - EBM) is both an investigative and prosecutorial authority and is dedicated to combating economic crime, mainly in metropolitan areas.

22. Authorities have comprehensive powers to compel production of, obtain access to, search premises for, and seize any documents needed during their investigations; as well as other investigative powers. However, there is little evidence that ML investigations are effectively pursued and ML prosecutions brought. Currently, charges are laid for predicate offences and not ML/FT offences, mainly due to the self laundering rule and the obligation to prosecute the predicate offence if the elements of that offence exist. Charges will be pursued only if it is believed the defendants cannot be prosecuted for predicate offences. Despite this, the limited number of investigations/prosecutions of third-party money launderers is a concern. The Swedish government should develop a more pro-active approach to pursuing money laundering charges. Training and education for law enforcement authorities in ML/FT offences should also be enhanced.

23. At present, there is no obligation to declare or disclose cash or bearer negotiable instruments while entering or leaving Swedish territory. However, the implementation of the EC Regulation on Cash Control in the near future will result in changes to the Swedish AML/CFT system in this regard.

3. Preventive Measures - Financial Institutions

24. Sweden in general is considered to be a safe country and not a major money laundering or terrorist financing centre. However, as for any developed financial centre, Sweden’s financial sector is vulnerable to money laundering and terrorist financing. Sweden has not conducted a risk assessment of its financial sector for AML/CFT, though it does use risk factors for other purposes.

25. The Swedish Act on Measures against Money Laundering (1993:768 as amended by 2005:409) (hereafter “AML Act”) contains customer identification as well as the other AML obligations that apply to a wide range of financial institutions. The Act on Criminal Responsibility for Particularly Serious Crimes in some cases (2002:444) (hereafter “CFT Act") also contains CFT measures for financial institutions. The only exceptions being that some credit card companies do not fall within the scope of the AML/CFT legislation and that the CFT Act does not apply to investment companies. Finansinspektionen (the Swedish financial supervisory authority) issued AML/CFT Regulations/Guidelines in June 2005. This publication contains elements (regulations) that are directly binding and enforceable, and other elements (general guidelines) that are indirectly enforceable and subject to sanctions where the institution is also failing to conduct its business in a sound manner.

26. Although Sweden has implemented customer identification obligations, it has not implemented full customer due diligence (CDD) requirements. The AML/CFT Acts require the financial institutions to conduct customer identification when: entering into a business relationship, for occasional transactions of 15,000 EUR or more, when there are doubts if the customer is acting on his/her own behalf, or when a financial institution has grounds to suspect that a transaction may constitute money laundering or terrorist financing. However, there are numerous exemptions to the requirements related to customer identification, which appear overly broad. There are insufficient requirements to ascertain the beneficial owner, e.g. no obligation to identify and verify the beneficial owner of a legal person. There are similarly no regulations to conduct ongoing CDD, enhanced CDD, or CDD on existing customers. Laws, regulations and other mechanisms should be amended to ensure that the full CDD requirements are implemented.

27. While the legal system regarding financial institution secrecy is mostly satisfactory, statutes dealing with a duty of confidentiality, both for domestic and international matters, allow for certain exceptions that result in a lack of fully effective implementation of the FATF requirements regarding financial institution secrecy laws. Sweden’s record-keeping requirements are generally broad and require legal persons as well as natural persons conducting business operations to maintain comprehensive accounts and accounting records for 10 years.

28. Financial institutions are required by the AML/CFT Acts to examine any transaction where there are reasonable grounds for suspecting money laundering or terrorist financing, and there are indirectly enforceable obligations in guidance that require examination of all unusual transactions. There are also AML/CFT Regulations which require financial institutions to set forth any findings in writing. Moreover, financial institutions may keep records of STRs filed, but must generally delete them after one year if they are filed under the Money Laundering Registers Act.

29. The requirement to report suspicious transactions is a direct, mandatory obligation, which applies regardless of any threshold and includes tax matters and attempted transactions. The AML and CFT Acts require financial institutions to report any circumstances that may be indicative of money laundering or terrorist financing to the FIU. It should be noted however, that limitations on the terrorist financing offence may also limit the reporting obligation. The laws provide a “safe harbor” for complying with reporting obligations and criminalise tipping off.

30. Several factors indicate that the system is not being implemented effectively: the rules to delete STRs (after one year for financial institutions and six months/three years for the FIU) reduce the effectiveness of the STR system. While money exchange businesses are required to file STRs, in practice, these businesses file reports on the basis that the transaction involves a large amount of currency—i.e., above a threshold of 130,000 SEK (approximately 13,000 EUR) with little, if any, information as to what made the reported transactions suspicious.

31. Sweden should continue to work with the financial sector to improve the total number of reports, the sectors that are reporting, the percentage of reporting entities and improve the overall quality of the reports filed. Finansinspektionen and the FIU should continue to identify red flag indicators and models of suspicious transactions that they can share with the private sector, along with examples of what constitutes helpful and informative suspicious transaction reports.

32. Financial institutions are obligated to establish internal procedures and policies to prevent money laundering and terrorist financing, which meet most of the FATF requirements. These internal procedures include inter alia CDD record retention, the detection of unusual and suspicious transactions and the reporting obligation. All financial institutions subject to Finansinspektionen’s AML/CFT Regulations/Guidelines are obligated to designate an AML/CFT compliance officer. However, appropriate screening procedures for employees should be introduced.

33. Subsidiaries of Swedish institutions abroad are subject to the regulations of the host country; however, Finansinspektionen can take corrective measures against a Swedish credit institution if the competent authority of the host country notifies Finansinspektionen that the Swedish credit institution has breached any rule of the host country. Sweden should implement an obligation to require financial institutions to apply the higher standards in the event that the AML/CFT requirements of the home and host countries differ, and to notify Finansinspektionen if they are unable to apply such standards.

34. Finansinspektionen is responsible for licensing and supervising most financial institutions such as banks and other credit institutions, insurance companies, insurance intermediaries, securities companies, collective investment companies and e-money businesses. Finansinspektionen exercises prudential supervision regarding all these financial institutions and has stated that it looks to Core Principles (Basel, IOSCO, IAIS) in its supervision of banks, insurance companies, and the securities sector also with regard to AML/CFT purposes. Certain “other financial institutions” (including currency exchange businesses, money transfer businesses and other financial services such as financial leasing companies) and deposit companies have to register at Finansinspektionen.

35. For licensed financial institutions, Finansinspektionen conducts full supervision. It may do both off and on-site inspections and has the power to compel production and to obtain access to all records, documents or information. There are generally adequate powers of enforcement and sanction for failure to comply with or properly implement AML/CFT requirements. Criminal sanctions can apply for tipping-off and for failure to comply with STR requirements. The range of administrative sanctions is broad and includes the power to remove a license or remove a board member or managing director (but not other senior management). Adequate fit and proper tests apply for board members and managing directors but not other senior management.

36. For registered financial institutions (deposit companies, money exchange and money remittance), the supervision is more limited and should be expanded. Finansinspektionen has no power to conduct on-site inspections, and the range of sanctions is also more limited. In general, the only registration requirement refers to ownership and Board of Directors: a person who has significantly neglected business or financial obligations or who has committed a serious crime may not engage in such business operations.

37. The AML/CFT Regulations/Guidelines contain guidance on internal control systems, customer identification procedures, risk management, the principle of Know Your Customer, monitoring and reporting of suspicious transactions, record keeping and staff training. The guidelines are relatively complete based on the current legislation but would be improved if sector-specific guidance were provided, and will need further modification when the FATF recommendations are fully introduced. In addition, guidelines are not currently applicable to certain credit card companies.

38. Following the FATF on-site, the primary responsibility for AML/CFT issues was shifted to a new unit of Finansinspektionen which will have three staff. For AML/CFT on-site inspections, support has also been provided by the Prudential Supervision Department. The focus of supervision during the last years was on larger financial groups, and the number of on-site inspections solely devoted to AML/CFT is still quite low. The current staffing changes in the area of AML/CFT should result in a higher number of employees focusing on this issue and a higher number of inspections focussed on a range of financial institutions (taking into account AML/CFT risk).

39. Money or value transfer services must register with Finansinspektionen in Sweden. However, the full range of requirements for financial institutions will need to be applied to remitters in the same way as for other institutions, as noted above.

4. Preventive Measures – Designated Non-Financial Businesses and Professions (DNFBPs)

40. The AML Act, as revised in 2005, includes AML obligations for most categories of DNFBPs: casinos, real estate agents, dealers in precious metals and stones (part of a larger category of dealers in high value items), lawyers and other legal professionals, and auditors (but not other accountants). There are several concerns regarding the scope of the Act: company service providers exist in Sweden but are not covered by the AML Act; and the Act does not apply to accountants that are not auditors (unless they are also tax advisors). Sweden should also bring DNFBPs under the scope of the CFT Act and develop adequate AML/CFT regulations.

41. The requirements in the AML Act apply equally to DNFBPs as for financial institutions. Customer identification must be conducted upon establishing business relations, for occasional transactions above 15,000 EUR, where there is a suspicion of money laundering. Casinos should be required to identify customers conducting transactions of 3,000 EUR and keep records for at least five years. Similarly as with financial institutions, Sweden should create a mandatory, direct obligation for all DNFBPs to monitor all unusual, large transactions or transactions with no visible economic purpose, make out findings in writing and maintain them for at least five years.

42. Like financial institutions, DNFPBs must report any circumstances that may be indicative of money laundering to the FIU, with the same “safe harbour” provisions. However, advocates, associate lawyers at law firms and auditors may disclose any information (“tip off”) 24 hours after the moment an investigation has been started, information has been handed over to the police or the police have started a formal preliminary investigation. This could hamper investigations heavily and should be amended.

43. From the time the new reporting obligation came into force (1 January 2005) up to August 2005, the FIU had received 35 STRs from casinos, but only 10 STRs from other DNFBPs. It is too early to assess the effectiveness of the system. However, parts of the DNFBP sector pointed out that problems could arise: on the one hand, they feel obliged to terminate a relationship after filing an STR; on the other they may be obliged by other laws to inform their supervisory authority and the client when the resign from a contract.

44. The Swedish government has not yet designated any authority(ies) or SROs to monitor DNFBPs for compliance with AML/CFT requirements. Dealers in precious metals and stones are not monitored by any authority for any purpose; trust and company service providers are not subject to AML/CFT Acts or monitored by any authority. There are no administrative sanctions available specifically dealing with DNFBPs for breaches of AML/CFT obligations. For certain DNFBP, such as real estate agents, auditors, and members of the Bar Association, sanctions might be applied for breaches of their relevant legislation.

45. Licenses to arrange casino gaming shall only be issued to companies that wholly, directly or indirectly, are owned by the state. No further requirements to grant a license are defined. The Gaming Board (Lotteriinspektionen) supervises casinos, lotteries and other gaming for compliance with the Lotteries Act although only the Government itself may decide upon a sanction.

46. The Board of Supervision of Real Estate Agents is responsible for registration, supervision and guidance pursuant to the Estate Agents Act. The Board viewed AML compliance as a necessary condition to be in accordance with sound estate agency practice (as mentioned in Section 12 of the Estate Agents Act) and the integrity criteria mentioned above. The Board also prepared guidelines to assist the sector with its AML obligations. The Bar Association registers advocates and also sees itself as responsible for the supervision of advocates’ compliance with the obligations according to the AML Act and indicated that an advocate who fails to fulfil his or her AML obligations could be subject to disciplinary action including being expelled from the Bar. Approved or authorized auditors have to be registered at the Supervisory Board of Public Auditors. FAR – the professional institute for authorized public accountants – was working on AML guidelines at the time of the on-site visit, and these were adopted in October 2005.

47. In addition to the non-financial businesses and professions that are designated according to the FATF Recommendations, the obligations of the AML Act also apply to tax advisors and natural and legal persons who conduct professional commerce with, or sales by auction of, antiques, art, scrap metal or means of transport in cases where cash payment is made in an amount corresponding to 15,000 EUR or more.

5. Legal Persons and Arrangements & Non-Profit Organisations

48. Sweden’s national system of registering companies—the vast majority of legal persons in Sweden—provides that comprehensive and accurate information on directors shall be collected and made available publicly. Information regarding shareholders is required to be kept at the company’s registered office and be made available to the public. Although there is no time period specified to update changes in shareholdings for private companies, shareholders cannot formally exercise shareholder rights until they are registered. Information is collected and made available on a public registry for registered partnerships and economic associations. However, the provisions do not require that information on beneficial ownership be collected or made available, and do not provide adequate access to information on beneficial ownership in a timely manner.

49. Certain foundations—foundations that conduct business activities, parent foundations, foundations set up with participation of the state, charitable foundations—are subject to broad disclosure requirements and monitoring by the County Administrative Board (CAB). While much information is public, the system would be improved if the information collected were centralized, possibly at the Companies Registration Office. In addition, a majority of foundations (those of smaller size, family foundations, and foundations for the benefit of one person) do not need to be registered, and therefore relevant information is not collected on these entities. Also, since they are not registered, the CAB’s ability to effectively monitor these entities is limited. Sweden should consider broadening the registration and/or recordkeeping requirements for foundations to ensure that adequate information on ownership and control is available to competent authorities.

50. Several forms of non-profit organisations exist in Sweden with different requirements for registering and record-keeping. The legal forms include non-profit associations, religious communities, foundations including family foundations, and economic associations established before 1951. No specific review of the adequacy of laws and regulations that relate to non-profit organisations that can be abused for FT had been completed at the time of the evaluation visit.

51. There are no specific measures in place to ensure that terrorist organisations cannot pose as legitimate non-profit organisations, although some are subject to significant oversight on a voluntary basis through membership in the Swedish Foundation for Fundraising Monitoring (SFI). It is unclear how much of the sector this actually covers in terms of size and risk, although SFI indicates that it has approximately 400 members, through which it believes the vast majority of charitable donations which are provided in Sweden are channelled. SFI monitoring includes the vetting of potential members, annual audits, and a special account number which helps to assure potential donors as to the foundation’s credibility.

6. National and International Co-operation

52. Sweden has a generally comprehensive system for national and international co-operation. National co-operation and co-ordination at the operational level is coordinated by the FIU and is generally strong, especially as the FIU is part of the National Police and engages in numerous projects to combat crime. The FIU co-operates with at least 51 other law enforcement bodies (including units within the National Police, county police authorities, the EBM, and the Customs Service) through information sharing and through participation in intelligence or co-operation projects. However, cooperative projects could more specifically target money laundering and terrorist financing issues.

53. There is also some co-ordination and co-operation at the policy level; however, a more pro-active approach to policy co-ordination on AML/CFT issues is recommended. Sweden should also review the effectiveness of its systems for combating money laundering and terrorist financing on a regular basis.

54. Sweden has signed and ratified the United Nations Convention Against Illicit Traffic in Narcotic Drugs and Psychotropic Substances 1988 (Vienna Convention), the Convention against Transnational Organized Crime 2000 (Palermo Convention), and the Convention on the Suppression of the Financing of Terrorism 1999 and has implemented the vast majority of the three Conventions provisions relevant to the FATF recommendations. However, as noted above, certain aspects of the ML offence should be strengthened, as could measures for customer due diligence.

55. The Swedish authorities are able to provide a wide range of mutual legal assistance. Swedish authorities are able to assist foreign states with all the powers available for Swedish authorities in domestic investigations or proceedings. Requests from Nordic and European countries can be handled expeditiously as they are channelled directly between judicial authorities. Sweden should keep a more complete set of statistics, thus enabling it to better track the mutual legal assistance requests it receives and makes, and ensuring they are handled in a timely way. Dual criminality is not required for non-coercive measures or for search or seizure requests from EU countries, Norway, or Iceland.

56. Requests made under the Act on International Co-operation in the Enforcement of Criminal Judgements 1972 are sent to the Ministry of Justice. The process for executing an order from an EU state is more efficient and can be sent directly to the prosecutor, without the need for a separate Swedish decision on the matter. At this time Swedish authorities are not considering establishing an asset forfeiture fund.

57. Both ML/FT (as criminalised) are extraditable offences in Sweden; however, there are differences among the principles applied for extradition in Nordic countries, countries with which Sweden signed a bi-lateral agreement, EU countries, and non-EU countries. Within the EU, the procedure for extradition has in general been replaced by surrender according to the European Arrest Warrant. Dual criminality is not required as long as the offences are punishable by at least three years imprisonment in the requesting state. For a non-Nordic State, dual criminality is required, and the act for which extradition is requested must be equivalent to a crime that is punishable under Swedish law by imprisonment for at least one year. In these cases, Swedish nationals may not generally be extradited.

58. Where Swedish nationals are not extradited, the government may submit the case to its competent authorities for the purpose of prosecution of the offences set forth in the request. The Central Authority at the Ministry of Justice, informs the prosecuting authorities who are able to decide whether investigation or prosecution should take place. However, there were no statistics available to indicate whether this system was working effectively.

59. For extradition to another Nordic state, it is only required that the act is punishable by law in the requesting state. There is therefore no general requirement of “dual criminality", and a Swedish national can be extradited if the offender was domiciled in the other country for at least two years or if the act committed is punishable in Swedish by more than four years imprisonment.

60. In general, other forms of international co-operation appear satisfactory. Exchanges of information are not made subject to disproportionate or unduly restrictive conditions, and there appears to be a range of mechanisms or channels that can be used to co-operate with other countries. There are a series of bi-lateral agreements on police co-operation, and Finansinspektionen has the statutory power to share prudential information with other supervisory authorities, including banking, insurance and securities supervisors. Finansinspektionen has not received any foreign supervisory requests relating to AML/CFT. There are no indications that co-operation is ineffective; however, comprehensive statistics should be maintained in order to evaluate properly the effectiveness of the systems for information exchange.

Table 1:

Ratings of Compliance with FATF Recommendations

The rating of compliance vis-à-vis the FATF Recommendations should be made according to the four levels of compliance mentioned in the 2004 Methodology [Compliant (C), Largely Compliant (LC), Partially Compliant (PC), Non-Compliant (NC)], or could, in exceptional cases, be marked as not applicable (na).

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Table 2:

Recommended Action Plan to Improve the AML/CFT System

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1

A copy of the full Mutual Evaluation Report can be found on the FATF website: www.fatf-gafi.org.

2

The National accountings PM2005:08. SEK = Swedish Krona. At the time of the on-site visit, 1 SEK = 0.11 EUR or 0.14 USD.

Sweden: Report on the Observance of Standards and Codes: FATF Recommendations for Anti-Money Laundering and Combating the Financing of Terrorism
Author: International Monetary Fund