Money Laundering Policy in Sweden Prepared by Nikitin Nikita IFF20-2m Moscow 2021 FATF as a powerful tool The Financial Action Task Force (on Money Laundering) (FATF), also known by its French name, Groupe d'action financière (GAFI), is an intergovernmental organisation founded in 1989 on the initiative of the G7 to develop policies to combat money laundering. In 2001, its mandate was expanded to include terrorism financing. Since 2000, FATF has maintained the FATF blacklist (formally called the "Call for action") and the FATF greylist (formally called the "Other monitored jurisdictions"). The blacklist has lead financial institutions to shift resources and services away from the listed. This in turn has motivated domestic economic and political actors in the listed countries to pressure their governments to introduce regulations that are compliant with the FATF. FATF as a powerful tool Recommendations of FATF: • Implement relevant international conventions Participant status of countries since 2016 Regular Follow-up Enhanced follow-up Net yet assessed Greece Australia Argentina Hong Kong Austria Brazil Ireland Belgium France Israel Canada Germany • Implement customer due diligence (e.g., identity verification), record keeping and suspicious transaction reporting requirements for financial institutions and designated non-financial businesses and professions Italy China India Norway Denmark Japan Portugal Finland Luxembourg Russia Iceland Netherlands Spain Malaysia New Zealand • Establish a financial intelligence unit to receive and disseminate suspicious transaction reports Sweden Mexico South Africa UK Saudi Arabia • Criminalize money laundering and enable authorities to confiscate the proceeds of money laundering Singapore • Cooperate internationally in investigating and prosecuting money laundering South Korea Switzerland USA How money laundering are managed in Sweden Swedish Legislation: Swedish Money Laundering and the Financing of Terrorism Act The Money Laundering and Terrorist Financing (Prevention) Act (the AntiMoney Laundering Act) is the administrative framework applying to firms in certain sectors. The purpose of the regulations is to prevent firms from being used for money laundering and terrorist financing. Firms that are subject to the Anti-Money Laundering Act are responsible for reporting, without delay, suspected money laundering or terrorist financing in their operations to the Financial Intelligence Unit within the Swedish Police. Reporting shall be done as instructed by the Financial Intelligence Unit. Money Laundering Crimes Penal Code Regulatory body: Money Laundering Crimes Penal Code The Act on Penalties for Money Laundering Offences is the criminal law framework covering money laundering and terrorist financing. Under the Act, laundering money is a criminal offence. Finansinspektionen's task is to supervise the financial firms that are subject to the Anti-Money Laundering Act to ensure their compliance with the rules set out therein to prevent them from being used for money laundering. Main terms of AML legislation Money laundering is the act of concealing the connection between criminal acts and money or other property. This may include, for example, money obtained from drug offences, tax offences or fraud that is “laundered” in order to be used in the legitimate financial system. Terrorist financing concerns the financial support of terrorism by collecting, providing or receiving money or other property that is intended to finance terrorism. In terrorist financing schemes, so-called reverse money laundering is common, which means that instead of laundering criminal profits, legitimately earned money is often used for illegal activities. Hawala refers to a financial service that is carried out outside an established financial system. In practice, this can be a scenario where the sender and receiver physically move money between themselves, as it is not technically possible to settle the transaction (i.e., perform clearing) in any other way. It may also be the case that receivables are cleared between sender and receiver without funds ever being transferred. Obligations under Swedish AML legislation Money laundering regulations are often referred to as risk-based regulations General risk assessment This means that you need to assess how the products and services you provide in your business can potentially be used for money laundering and terrorist financing and the magnitude of the risk of this occurring Routines and guidelines Because you provide money transfer services, you must have established routines and guidelines in place for, among other things, customer due diligence, monitoring and reporting Risk assessment of customers In addition to performing a general assessment of the risks associated with your own business, you need to assess the risk of money laundering and terrorist financing in relation to each individual customer, i.e. the customer's own risk profile Monitoring and reporting You must monitor ongoing business relationships and review individual transactions in order to detect suspicious transactions and other activities, as well as transactions and activities that deviate from what you already know about the customer and transactions that can be assumed to be part of a money laundering or terrorist financing scheme Thank you for your attention!