Sweden - FATF-GAFI.ORG

1 April 2017 Anti-money laundering and counter-terrorist nancing measuresSwedenMutual Evaluation ReportThe Financial Action T ask Force (F ATF) is an independent inter-governmental body that develops and promotes policies to protect the global financial system against money laundering, terrorist financing and the financing of proliferation of weapons of mass destruction. The fatf Recommendations are recognised as the global anti-money laundering (AML) and counter-terrorist financing (CTF) standard. For more information about the fatf , please visit the website: This document and/or any map included herein are without prejudice to the status of or sovereignty over any territory, to the delimitation of international frontiers and boundaries and to the name of any territory, city or area. This assessment was adopted by the fatf at its February 2017 Plenary meeting.

2 Citing reference: 2017 fatf . All rights reserved. No reproduction or translation of this publication may be made without prior written permission. Applications for such permission, for all or part of this publication, should be made to the fatf Secretariat, 2 rue Andr Pascal 75775 Paris Cedex 16, France (fax: +33 1 44 30 61 37 or e-mail: Photo credits cover photo: Bj rn Olin/ fatf (2017), Anti-money laundering and counter-terrorist financing measures - Sweden , Fourth Round Mutual Evaluation Report, fatf , Paris Anti-money laundering and counter-terrorist financing measures in Sweden 2017 @ fatf 2017 1 CONTENTS A. Key Findings .. 3 B. Risks and General Situation .. 4 C. Overall Level of Effectiveness and Technical Compliance .. 5 D. Priority Actions .. 10 Effectiveness & Technical Compliance Ratings .. 12 MUTUAL EVALUATION REPORT .. 13 Preface .. 13 CHAPTER 1.)

3 ML/TF RISKS AND CONTEXT .. 15 ML/TF Risks and Scoping of Higher-Risk Issues .. 15 Materiality .. 18 Structural Elements .. 18 Background and other Contextual Factors .. 19 CHAPTER 2. NATIONAL AML/CFT POLICIES AND 29 Key Findings and Recommended Actions .. 29 Immediate Outcome 1 (Risk, Policy and Coordination) .. 30 CHAPTER 3. LEGAL SYSTEM AND OPERATIONAL ISSUES .. 37 Key Findings and Recommended Actions .. 37 Immediate Outcome 6 (Financial intelligence ML/TF) .. 40 Immediate Outcome 7 (ML Investigation and Prosecution) .. 52 Immediate Outcome 8 (Confiscation) .. 68 CHAPTER 4. TERRORIST FINANCING AND FINANCING OF PROLIFERATION .. 81 Key Findings and Recommended Actions .. 81 Immediate Outcome 9 (TF investigation and prosecution).. 83 Prosecution/conviction of types of TF activity (consistent with the country s risk-profile) .. 84 Immediate Outcome 10 (TF preventive measures and financial sanctions).

4 92 Immediate Outcome 11 (PF financial sanctions) .. 96 CHAPTER 5. PREVENTIVE MEASURES .. 101 Key Findings and Recommended Actions .. 101 Immediate Outcome 4 (Preventive Measures) .. 102 CHAPTER 6. SUPERVISION .. 109 Key Findings and Recommended Actions .. 109 Immediate Outcome 3 (Supervision) .. 110 CHAPTER 7. LEGAL PERSONS AND ARRANGEMENTS .. 123 Key Findings and Recommended Actions .. 123 Immediate Outcome 5 (Legal Persons and Arrangements) .. 124 CHAPTER 8. INTERNATIONAL COOPERATION .. 129 Key Findings and Recommended Actions .. 129 Immediate Outcome 2 (International Cooperation) .. 130 2 Anti-money laundering and counter-terrorist financing measures in Sweden 2017 @ fatf 2017 TECHNICAL COMPLIANCE 141 Recommendation 1 Assessing Risks and Applying a Risk-Based Approach .. 141 Recommendation 2 National Cooperation and Coordination .. 143 Recommendation 3 Money Laundering Offence.

5 145 Recommendation 4 Confiscation and Provisional Measures .. 148 Recommendation 5 Terrorist Financing Offence .. 149 Recommendation 6 Targeted Financial Sanctions Related to Terrorism and Terrorist Financing .. 150 Recommendation 7 Targeted Financial Sanctions Related to Proliferation .. 155 Recommendation 8 Non-Profit Organisations .. 157 Recommendation 9 Financial institution secrecy laws .. 160 Recommendation 10 Customer due diligence .. 160 Recommendation 11 Record-keeping .. 163 Recommendation 12 Politically exposed persons .. 164 Recommendation 13 Correspondent banking .. 164 Recommendation 14 Money or value transfer services .. 165 Recommendation 15 New technologies .. 166 Recommendation 16 Wire transfers .. 167 Recommendation 17 Reliance on third parties .. 169 Recommendation 18 Internal controls and foreign branches and subsidiaries.

6 170 Recommendation 19 Higher-risk countries .. 171 Recommendation 20 Reporting of suspicious transaction .. 171 Recommendation 21 Tipping-off and confidentiality .. 172 Recommendation 22 DNFBPs: Customer due diligence .. 172 Recommendation 23 DNFBPs: Other measures .. 173 Recommendation 24 Transparency and beneficial ownership of legal persons .. 174 Recommendation 25 Transparency and beneficial ownership of legal arrangements .. 179 Recommendation 26 Regulation and supervision of financial institutions .. 180 Recommendation 27 Powers of supervisors .. 183 Recommendation 28 Regulation and supervision of DNFBPs .. 183 Recommendation 29 Financial Intelligence Units .. 184 Recommendation 30 Responsibilities of law enforcement and investigative authorities .. 188 Recommendation 31 Powers of law enforcement and investigative authorities .. 190 Recommendation 32 Cash Couriers.

7 192 Recommendation 33 Statistics .. 195 Recommendation 34 Guidance and feedback .. 195 Recommendation 35 Sanctions .. 196 Recommendation 36 International Instruments .. 198 Recommendation 37 Mutual Legal Assistance .. 198 Recommendation 38 Mutual Legal Assistance: Freezing and Confiscation .. 200 Recommendation 39 Extradition .. 202 Recommendation 40 Other Forms of International Cooperation .. 203 Summary of Technical Compliance Key Deficiencies .. 209 GLOSSARY OF ACRONYMS .. 212 Anti-money laundering and counter-terrorist financing measures in Sweden 2017 @ fatf 2017 3 Executive Summary 1. This report provides a summary of the anti-money laundering and combating the financing of terrorism (AML/CFT) measures in place in Sweden at the date of the on-site visit (26 May 2016 to 10 June 2016). It analyses the level of compliance with the fatf 40 Recommendations, the level of effectiveness of Sweden s AML/CFT system, and makes recommendations on how the system could be strengthened.

8 A. 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.

9 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 4 Anti-money laundering and counter-terrorist financing measures in Sweden 2017 @ fatf 2017 EXECUTIVE SUMMARY 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.

10 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. B. Risks and General Situation 2.