Anti-Money Laundering - What does it mean?
The term anti-money laundering ( referred to as AML) refers to laws, ordinances and other regulations, policies and procedures aimed at preventing money laundering and corruption. In Sweden, there are two main laws targeting money laundering, the Swedish Measures Against Money Laundering and Terrorist Financing Act (Sw. lag (2017:630) om åtgärder mot penningtvätt och finansiering av terrorism), (we will refer to it as the Anti-Money Laundering Act), and the Penalties for Money Laundering Offences Act (Sw. lag (2014:307) om straff för penningtvättsbrott).
The Anti-Money Laundering Act
The objective of the Anti-Money Laundering Act is to prevent companies from being used for money laundering and terrorist financing. The act, which was adopted in August 2017, is intended to implement the EU’s fourth AML directive.
The Anti-Money Laundering Act is an administrative framework that applies to companies within certain sectors and different entities, including credit institutions, financial institutions, auditors, external accountants and tax advisors, legal professionals (under specific conditions) and providers of gambling services.
In Sweden, the Swedish Financial Supervisory Authority (Sw. Finansinspektionen) is the regulatory authority, responsible for compliance under the Anti-Money Laundering Act. Hence, the Financial Supervisory Authority is responsible for ensuring that entities, subject to the Anti-Money Laundering Act, act in compliance with the provisions set out. Regarding entities that are not subject to the Anti-Money Laundering Act, other authorities and self-regulating bodies are responsible for the supervision.
As a basis, entities subject to the Anti-Money Laundering Act must have an AML-program in place. In other words, such entities must adopt policies, measures and other requirements targeted at combating money laundering. It should be noted that the Anti-Money Laundering Act targets both legal persons and its private individuals. Hence, if a company fails to be compliant with the Anti-Money Laundering Act, also a director, CEO or other individual representing the company can be targeted with sanctions, should the individual be found accountable for a breach of the Anti-Money Laundering Act.
The Penalties for Money Laundering Offences Act
The Penalties for Money Laundering Offences Act is the legal framework covering crimes, such as money laundering and terrorist financing. For money laundering the sentence is imprisonment for a maximum of two years. If the committed crime is serious, the sentence is imprisonment for a maximum of six years, but not less than six months.
International regulations and organizations
Since money laundering is usually conducted by international criminal organizations, there are several international organizations tasked with preventing money laundering. For example, the European Council can issue sanctions, targeting persons and entities suspected of involvement in acts of terrorism. Limits in respect of countries that companies are allowed to conduct business with can also be imposed. Currently, there are more than 25 countries that are subject to business sanctions, of varying scope, issued by the EU. In relation to some countries, such as North Korea, in principle, all business relationships are banned, while in other countries there are restrictions on the trade of certain items, e.g. in respect of Iraq, items of cultural importance.
Another international organization that works to prevent money laundering is the Financial Action Task Force (hereinafter the FATF). Sweden is a member of the FATF and works to implement the standards that FATF issues. FATF regularly issues statements on what risk factors that certain jurisdictions have with regards to money laundering.
There is a section of the Swedish police force that works to investigate cases of money laundering. This section is known as the Financial Intelligence Unit of the Swedish Police (Sw. Finanspolisen). (hereinafter referred to as the FP). Any reports that involves suspected money laundering is processed and analyzed by the FP. If an investigation results in a suspicion of money laundering or any other financial crime, then such findings are reported to the Swedish Economic Crime Authority (Sw. Ekobrottmyndigheten), (hereinafter referred to as the EBM). The EBM works to prevent and combat financial crimes and the focus lies on the investigation of more severe cases of financial crimes, but the EBM also takes actions to prevent money laundering and intelligence gathering. If a criminal conduct could be considered a risk to the Swedish national security, such as financing of terrorism, the Swedish Security Service (Sw. Säkerhetspolisen) can be tasked with the investigation.
Reporting to the Swedish Financial Supervisory Authority
In principle, all entities conducting business in Sweden that are subject to the Anti-Money Laundering Act, have an obligation to file an annual report to the Swedish Financial Supervisory Authority. Foreign entities conducting business in Sweden only have an obligation to send an annual report in respect of the business that have been conducted in Sweden. This means that if a branch of a foreign company has been set up and operates in Sweden, the branch only has an obligation to report in respect of the Swedish branch, not of the foreign company. The operators are required to make this report no later than on 31 March each year. The Swedish Financial Supervisory agency has published several documents with regards to what the operators are required to report.
In principle, the Swedish AML-regulation are applicable to anyone, both legal entities and private individuals, conducting business in Sweden. Hence, business operators must be up-to-date with the applicable regulations. At minimum, this means that business operators have an obligation to make annual reports to the Swedish Financial Supervisory Authority. Before conducting business with a company originating from another country, the company must be aware that there might be sanctions or other limits or restrictions imposed on such other country. There are several organizations tasked with preventing money laundering. The FATF regularly publishes reports on what type of businesses and in which geographical regions there are a high risk for laundering money. In Sweden there are mainly two agencies combating money laundering, EBM and the FP. In certain cases, also the Swedish Security Service have jurisdiction for money laundering investigations.