|2. Legal System and Related Institutional Measures|
|Criminalisation of Money Laundering (R.1, 2 & 32)|
Swedish authorities should criminalise self-laundering.
Another potential challenge to prosecution is the requirement to prove a purpose of intent to conceal the origin of the assets in Sections 6a (1) (2). Authorities should consider removing this purpose element, insofar as this is not contrary to the constitutional principles or basic concepts of the legal system.
The authorities should extend the ancillary offences for basic instances of the criminal offence of money laundering, including conspiracy to commit and attempt.
Sweden should ensure that the ancillary offence of conspiracy covers the full range of profit-generating activities in which criminal groups engage, or Sweden should specifically criminalise participation in an organised criminal group.
The authorities should institute higher penalties for the criminal offence of money laundering and develop a more pro-active approach to prosecuting money receiving offences.
Currently the mental element of suspicion is generally covered in the provisions for “petty receiving", since it covers situations where the defended suspected the illicit origin of the proceeds. (This is also stated in the preparatory works of the legislation.) However, Swedish authorities could also consider applying these elements to the basic offence and/or increasing the penalties for petty receiving. The authorities of Sweden should expand the system to be able to more effectively apply a “corporate fine” to legal persons.
|Criminalisation of Terrorist Financing (SR.II, R.32)|
Sweden should amend its legislation to specifically cover 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.
Authorities should also provide higher penalties, which would take into account the grave nature of the offences.
|Confiscation, freezing and seizing of proceeds of crime (R.3, R.32)|
The authorities should consider providing stronger provisional measures of freezing of property to prevent any dealing, transfer or disposal of property subject to confiscation. For example, the system could be strengthened by the removal of the need to demonstrate a reasonable cause to anticipate flight or removal of property.
Sweden should also consider whether a specific, focussed multi-disciplinary body should be created that focuses on confiscation and related measures.
The authorities should consider providing additional training and encourage focus of the law enforcement authorities to trace and look for assets when investigating any type of crime and seize funds and other property on a regular basis whenever possible, with the emphasis in cases of ML and FT.
|Freezing of funds used for terrorist financing (SR.III, R.32)|
Sweden should implement a national mechanism to give effect to requests for freezing assets and designations from other jurisdictions and to enable freezing funds of European citizens/residents.
The Swedish authorities should also enact measures that would allow for the possibility of freezing funds or other assets where the suspect is an individual terrorist or belongs to a terrorist organisation, where that person or organisation is not already a designated person.
The Swedish authorities should establish an effective system for communication among governmental institutions and with the private sector (and the like) to facilitate every aspect of the freezing/unfreezing regime within Sweden.
The Swedish authorities should consider providing more clear and practical guidance to financial institutions that may hold terrorist funds concerning their responsibilities under the freezing regime and clarify the procedure for authorising access to funds/assets that are frozen and that are determined to be necessary on humanitarian grounds in a manner consistent with S/RES/1452(2002). Clear communication channels for providing feedback between the government and financial sector may be considered.
|The Financial Intelligence Unit and its functions (R.26, 30 & 32)|
It is recommended that Sweden allocate more staff to the FIU as soon as possible. When hiring staff to the FIU, there is a need to review composition of the specialists in the FIU; for instance, for the provision of more analysts.
Sweden should make the changes needed in the legislation to remove the time limits and allow for automatic storing for at least five years of all STRs from reporting entities.
Sweden should follow through on its project of a new register in order to enable larger electronic reporting for the reporting parties.
In general, it is recommended that the FIU take a more active role in guiding reporting parties to improve the quality of reporting and reduce the high number of threshold reports. The FIU should also broaden its attention beyond the scope of examining mainly tax matters and devote itself to the whole scale of ML/FT offences. Therefore, more training in these areas is recommended, and co-operation with investigative and law enforcement authorities can be enhanced.
Sweden should also be able to breakdown the number STRs by ML/FT suspicions and offences. In addition, there should be separate statistics for FI and DNFBPs, as at least for 2005 the statistics do not separate between these two sectors.
|Law enforcement, prosecution and other competent authorities (R.27, 28, 30 & 32)|
The Swedish government should develop a more pro-active approach to pursuing money laundering and terrorist financing charges.
A stronger focus on proceeds of crime and understanding of ML process by investigators is needed. Education and training of law enforcement authorities in ML/FT offences should be improved. Changes to allow for prosecution of self-laundering and to allow prosecutors more flexibility to pursue ML and FT charges are also recommended.
It is recommended that Swedish authorities review the adequacy of total resources allocated to ML investigation. The resources for different investigative methods should also be reviewed; for example, the lack of people in e.g. surveillance teams was said to be a problem.
Sweden should collect statistics on a systematic basis concerning the ML/FT investigations, prosecutions, convictions and types of sanctions (criminal and administrative) imposed for ML/FT as well as on property frozen, seized or confiscated.
|Cross Border declaration or disclosure (SR.IX)|
Sweden should adopt legislation and implement measures conforming to the requirements of SR.IX
|3. Preventive Measures – Financial Institutions|
|Risk of money laundering or terrorist financing|
Sweden should conduct a risk assessment of the financial sector in order to identify areas of higher and lower AML risk.
|Customer due diligence, including enhanced or reduced measures (R.5 to 8)|
Sweden should engage with the private sector to promote full compliance with its existing regulations.
Sweden should implement as mandatory requirements (some of them by law or regulation) the following missing elements of Recommendation 5 as a matter of priority:
Financial institutions should be required to undertake full CDD measures;
Financial institutions should be required to perform customer identification when there are doubts as the veracity of the previously obtained customer or when required under SR VII;
Financial institutions should be required to extend the identification and verification measures regarding the identity of the beneficial owner;
Financial institutions should be required to inquire as to the purpose and intended nature of the business relationship in extension to what is said in the AML/CFT general guidelines on KYC;
Ongoing due diligence on the business relationship should be required in extension to what is said in the AML/CFT general guidelines on KYC;
Enhanced due diligence for higher risk categories of customer, business relationship or transaction should be required in extension to what is said in the AML/CFT general guidelines on KYC;
The timing of verification should be regulated;
Financial institutions should not be permitted to open an account when adequate CDD has not been conducted;
Extension of what is said in the AML/CFT general guidelines concerning rules governing the CDD treatment of existing customers on the basis of materiality and risk.
Sweden should also include investment fund companies within the scope of the CFT Act and all means of payment, including the credit card companies like American Express that are not currently covered, should also be placed within the scope of the AML and CFT Acts and regulations.
Where guidelines may be enforced for licensed financial institutions, Sweden should introduce corresponding, enforceable obligations for registered financial institutions (money exchange, remittance, and deposit companies).
It is recommended that Sweden engage all aspects of the private sector to develop regulations and guidance that are responsive to the unique realities and vulnerabilities of each part of the financial sector.
Sweden should address whether or not financial institutions should be permitted to apply simplified or reduced CDD measures, and issue appropriate guidance.
Sweden should require financial institutions to refuse to open accounts either when it is not possible for the financial institution to complete CDD.
Measures should be mandated to fully implement Recommendations 6 and 7.
Sweden has a regulation that addresses the issue of non-face to face transactions, but there is no clear general guidance regarding emerging technological developments. Sweden should continue addressing this issue.
|Third parties and introduced business (R.9)|
|Financial institution secrecy or confidentiality (R.4)|
Sweden should consider explicitly allowing for the sharing of information within a business operation, like a business conglomerate offering multiple financial services to its customers, in order to provide the clarity needed for the private sector that would promote free information exchange for commercial purposes.
|Record keeping and wire transfer rules (R.10 & SR.VII)|
Sweden should create an obligation in law or regulation to require that customer identification records must be made available on a timely basis.
Finansinspektionen should also ensure through on-site examinations or another regulatory tool that the record keeping requirements of the AML Act and Finansinspektionen regulations are being fully complied with by the private sector.
Sweden should implement SR VII.
|Monitoring of transactions and relationship (R.11 &21)|
Since guidance is not enforceable for registered financial institutions (money exchange and relationships (R.11 & 21)remittance companies, deposit companies), Sweden should create enforceable obligations for these institutions to implement the specific requirements of Recommendations 11 and 21.
Sweden should consider implementing more directly enforceable obligations that would explicitly require financial institutions to pay attention to all complex, unusually large transactions and transactions with no visible economic purpose and make the findings out in writing.
Sweden should create an obligation to keep the findings of these examinations available for at least five years and make them available to competent authorities.
Sweden should also make more mandatory the specific obligations of Recommendation 21.
Finansinspektionen should continue to promote effective implementation of that guidance within the private sector.
|Suspicious transaction reports and other reporting (R.13-14, 19, 25 & SR.IV)|
Recommendation 13 and Special Recommendation IV:
Sweden should extend the scope of its reporting requirement to the remaining financial institutions in the FATF definition not currently covered by the AML Act (i.e., other means of payment including services like American Express) and the CFT Act (investment companies).
Sweden should also amend the CFT Act to ensure that the reporting obligation would not exclude transactions related to funds to be used by a terrorist organisation or an individual terrorist.
Sweden should continue to work with the financial sector to improve the total percentage of reporting entities and improve the overall quality of the reports filed.
Finansinspektionen and the FIU should continue outreach to the private sector and provide better general and specific guidance.
Recommendation 19: Sweden should give further consideration to the feasibility of a system whereby financial institutions report all transactions in currency above a fixed threshold to a central agency with a computerised database.
Sweden should consider providing sector-specific feedback, which might make the STR system more effective.
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, to aide the private sector in complying with the obligation to file STRs.
|Internal controls, compliance, audit and foreign branches (R.15 & 22)|
Sweden should expand the coverage of AML Act and Finansinspektionen regulations to all issuers of means of payment.
Furthermore, it should be made a more direct obligation to allow the compliance officer timely access to all relevant information and to establish an independent audit function.
An obligation should be introduced to require financial institutions to establish screening procedures to ensure high standards when hiring employees.
Finally, where enforceable measures are created in guidance (access to information for the compliance officer and establishment of an independent audit function) for licensed financial institutions, corresponding obligations should be created for registered financial institutions (money exchange and remittance companies, and deposit companies).
Sweden should consider implementing a more direct obligation to require financial institutions to ensure that their foreign branches and subsidiaries observe AML/CFT measures consistent with the Swedish requirements and the FATF recommendations.
Sweden should add provisions to clarify that particular attention has to be paid to branches and subsidiaries in countries which do not or insufficiently apply the FATF recommendations and that the higher standards have to be applied in the event that the AML/CFT requirements of the home and host countries differ.
|Shell banks (R.18)|
Sweden should implement provisions with regard to a prohibition on financial institutions to enter or continue correspondent banking relationship with shell banks.
There should be an obligation on financial institutions to satisfy themselves that a respondent financial institution in a foreign country is not permitting its accounts to be used by shell banks.
|The supervisory and oversight system - competent authorities and SROs Role, functions, duties and powers (including sanctions) (R.23, 30, 29, 17, 32 & 25)|
Recommendation 17: The range of administrative sanctions available for licensed institutions is generally broad but should be broadened to include a wider range of sanctions that could apply for senior management across the various financial categories.
The range of sanctions which can be imposed on registered financial institutions is limited and should be expanded.
It should also be noted that the different laws for registered institutions do not foresee any sanctions in case of a violation of the CFT Act.
Recommendation 23: It would be useful to clarify the need for a natural or legal person who conducts as a business the issuing or managing of means of payment (such as American Express) to apply for a license or a registration. The same concerns apply to the area of economic associations which have not yet been registered as deposit companies.
For licensing financial institutions, the fit and proper test should also apply to senior management. With regard to registered financial institutions it is recommended to have the ability to apply sanctions in case Finansinspektionen is not informed of changes regarding qualified holding and to introduce also a broader fit and proper test for the management.
It should be made possible to apply the provisions of the CFT Act to investment companies and to enforce guidelines in the AML/CFT Regulations/Guidelines to registered financial institutions.
The quality of supervision of MVTS providers and money or currency exchange services should be improved through an increased authority for on-going monitoring and increased resources of Finansinspektionen to allow focus on entities other than the larger financial groups.
Recommendation 25: Sweden should consider more sector-specific AML/CFT guidance, as well as other enhancements to the guidelines.
Recommendation 29: The powers of Finansinspektionen with regard to registered financial institutions are limited, and it could be more difficult to ensure full compliance. Finansinspektionen should be given the authority to conduct onsite inspections of deposit companies, money transfer service, money or currency changing service or other registered financial institutions
With regard to licensed institutions the sanction regime is limited to directors; a liability of the senior management should be introduced.
In general, the supervision with regard to the compliance with AML/CFT obligations should be founded on a risk-based approach.
Especially MVTS providers and foreign exchange offices which are deemed to be of a particular high risk in Sweden should be supervised more closely.
In general, the number of onsite inspections solely devoted to AML/CFT should be increased.
Recommendation 30: Finansinspektionen should increase the number of staff devoted to AML/CFT compliance. The current review of the staffing in the area of AML/CFT should lead to a higher number of employees focusing on this issue.
|Money value transfer services (SR.VI)|
Sweden should review its legislation to ensure it adequately covers the full range of MVT service operators.
Sweden should also require all MVT service operators to maintain a current list of their agents which must be made available to the designated competent authority.
Sweden should broaden the inspection powers of these institutions and broaden the range of sanctions available for failure to comply with AML/CFT provisions. It should consider placing MVTS providers under the full supervision of Finansinspektionen. This could be deemed useful since Swedish authorities confirmed that these are high risk activities from an AML/CFT perspective.
In general, Sweden should also take immediate steps to properly implement Recommendations 5-7, SR VII, and other relevant FATF recommendations, and to apply them also to MVTS providers.
|4. Preventive Measures – Non-Financial Businesses and Professions|
|Customer due diligence and record-keeping (R.12)|
Company service providers and those accountants not currently subject to the AML Act should be brought into the AML regime.
Sweden should bring all DNFBPs into the scope of the CFT Act and adequate AML/CFT regulations.
Applying Recommendation 5: Casinos should be required to identify customers conducting transactions of 3,000 EUR (down from the current 15,000 EUR threshold) and keep records for at least five years.
Applying Recommendations 6, 8, and 9: Sweden should adopt measures to implement Recommendations 6, 8, and 9 and also apply them to all DNFBPs.
Applying Recommendation 11: Sweden should create a mandatory, direct obligation for DNFBPs to monitor all unusual, large transactions or transactions with no visible economic purpose, and make out findings in writing. These findings should be kept for at least five years.
|Suspicious transaction reporting (R.16)|
Applying Recommendation 13: The AML Act should be amended to also cover company service providers and the non-regulated sector of accountants accordingly.
A main priority for the Swedish authorities should be to apply the requirements of the CFT Act to the DNFBPs as soon as possible.
It should be added to the AML Act that a report to the FIU has to be submitted promptly. It should also be considered to introduce an obligation for all supervisory bodies to report a STR to the FIU in the event that they become aware of any facts that may be indicative of money laundering or terrorist financing.
The Swedish authorities should also ensure that there are no open questions left with regard to the interpretation of the AML Act.
It should be avoided that the concept of self-incrimination in Article 6 in the European Convention for the Protection of Human Rights and Fundamental Freedoms becomes an excuse for not reporting a suspicion. This problem could be solved by introducing into the Swedish law the concept of active repentance.
Applying Recommendation 14: The allowance for advocates, associate lawyers at law firms and auditors to tip off (disclose any information 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) should be amended.
Applying Recommendation 15: DNFBPs should be required to designate a person responsible for implementing the AML/CFT obligations. Such an obligation (at least in the case of larger structures) and more detailed rules with regard to internal control mechanism might seem appropriate.
Applying Recommendation 21: DNFBPs should also be required to give special attention to businesses with non-cooperative countries and other countries with weaknesses in their AML/CFT systems.
The Swedish authorities should continue to undertake information campaigns directed at the DNFBPs to clarify their obligations especially with regard to the duty to make suspicious transaction reports.
|Regulation, supervision and monitoring (R.24-25)|
The Swedish government should formally designate authorities to have responsibility for the AML/CFT regulatory and supervisory regime and allow the full range of administrative sanctions to be applied for AML/CFT breaches.
These authorities should also be allowed to issue binding guidelines since these sectors would need more guidance concerning how to properly implement the AML.
The DNFBPs sectors should be brought into the scope of the CFT Act so that compliance with these obligations will be mandatory and monitored.
With regard to casinos, the Gaming Board or another authority should be provided adequate powers to enforce sanctions.
An authority should be designated to monitor and supervise dealers in precious metals and stones for compliance with AML/CFT obligations.
Trust and company service providers should be brought within the scope of the AML Act and properly monitored for AML/CFT obligations. Furthermore, it should be considered how legal professionals who are not members of the Bar Association and accountants who are not registered by the Supervisory Board of Public Accountants may be monitored with regard to AML/CFT.
R.25: For sectors where AML guidelines do not yet exist, the appropriate SRO or other authority should issue appropriate AML guidelines as soon as possible. Appropriate CFT guidelines also need to be issued for DNFBPs
|Other designated non-financial businesses and professions (R.20)|
Sweden should continue to take measures to encourage the development and use of modern and secure techniques for conducting financial transactions that are less vulnerable to money laundering especially with regard to the increase of cash withdrawals which has been observed by the FIU.
|5. Legal Persons and Arrangements & Non-Profit Organisations|
|Legal Persons – Access to beneficial ownership and control information (R.33)|
Sweden should broaden the system to require information on beneficial ownership/control to be supplied to the CRO and/or recorded by the legal entity itself to ensure that it is made readily available on a more timely basis, and to require the information to be kept up to date.
The system for registering foundations would be improved if the information collected were centralized, possibly at the Companies Registration Office.
Sweden should consider broadening the registration and/or recordkeeping requirements for foundations (to also apply to those of a smaller size, family foundations, and foundations for the benefit of one person) to ensure that adequate information on ownership and control is available to competent authorities.
|Legal Arrangements – Access to beneficial ownership and control information (R.34)|
|Non-profit organisations (SR.VIII)|
Swedish authorities should also consider strengthening coordination between non-profit sector oversight/regulatory bodies, law enforcement and security agencies, the FIU, and financial system regulators.
Sweden should implement measures to ensure that terrorist organisations cannot pose as legitimate NPOs. Sweden should implement broader measures to ensure that funds or other assets collected by or transferred through NPOs are not diverted to support the activities of terrorists or terrorist organisations.
Swedish authorities should consider providing guidance to financial institutions with regard to CDD and suspicious transaction reporting where the client is an NPO.
|6. National and International Co-operation|
|National co-operation and coordination (R.31 & 32)|
Co-operative projects could more specifically target money laundering and terrorist financing issues. 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 review the effectiveness of its systems for combating money laundering and terrorist financing on a regular basis.
|The Conventions and UN Special Resolutions (R.35 & SR.I)|
Sweden should strengthen its money laundering offence by including self-laundering as required by the Palermo Convention.
Sweden should enact more effective, proportionate and dissuasive sanctions, and review its conspiracy provisions to ensure that conspiracy applies to the range of criminal acts in which criminal groups engage.
Sweden should enact stronger measures for customer identification so as to be more fully compliant with Article 18 of the CFT Convention.
|Mutual Legal Assistance (R.36- 38, SR.V, and R.32)|
In order to ensure that coercive measures could consistently be applied, Sweden should specifically criminalise the following types of ML/FT activities: (i) conspiracy for basic money laundering offences; and (ii) collecting or providing funds/asset where the funds/assets are to be used by a terrorist organisation or individual terrorist.
Although there does not currently appear to be any difficulty enforcing foreign criminal judgements in practice, in order to avoid any future difficulties, Sweden should consider broadening the provisions of the 1972 Act on International Co-operation in the Enforcement of Criminal Judgments so that a treaty or other agreement with a foreign country is not needed and that would allow for a European confiscation order to be enforced, absent an international agreement, for someone not domiciled in Sweden. Sweden could also consider streamlining the system so that a Swedish court decision is not required before beginning proceedings.
Sweden should consider establishing an asset forfeiture fund into which all or a portion of confiscated property will be deposited and will be used for law enforcement, health, education or other appropriate purposes.
Sweden should keep statistics concerning: (i) the nature of mutual legal assistance requests; (ii) whether the mutual legal assistance request was granted or refused; (iii) what crime the request was related to; and (iv) how much time was required to respond to the request.
|Extradition (R.39, 37, SR.V & R.32)|
Sweden should ensure that the execution of the declaration of Sweden when signing the 1957 Convention on Extradition does not impede the processes of extradition of other nationals especially aliens who are residents of Sweden, to other countries.
To ensure that dual criminality does not impede extradition when the case involves FT activities, Sweden should specifically criminalise the collecting/providing funds to be used (for any purpose) by a terrorist organisation or individual terrorist.
Sweden should also collect and maintain statistics on: (i) the number of requests for extradition; (ii) the nature of the request; (iii) whether the request was granted or refused; (iv) what crime the request was related to; or (v) how much time was required to respond.
|Other Forms of Co-operation (R.40, SR.V & R.32)|
Sweden should collect and maintain statistics concerning the number of requests made and received by the FIU and the law enforcement authorities, including the nature of the request, whether it was granted or refused and the time required to respond.