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Mutual Evaluation of Sweden

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Assessment of the measures to combat money laundering and the financing of terrorism and proliferation in Sweden: ratings, key findings and priority actions.

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Mutual Evaluation of Sweden

  1. 1. Anti-money laundering and counter-terrorist financing measures in Sweden – Mutual Evaluation Report – April 2017 1 Anti-money laundering and counter- terrorist financing (AML/CFT) measures in Sweden Fourth Round Mutual Evaluation Key findings, ratings and priority actions April 2017 www.fatf-gafi.org/publications/mutualevaluations/documents/mer-sweden-2017.html
  2. 2. Anti-money laundering and counter-terrorist financing measures in Sweden – Mutual Evaluation Report – April 2017 Ratings – Effectiveness (1/3) 2 Immediate outcome of an effective system to combat money laundering (ML) and terrorist financing (TF) Extent to which Sweden has achieved this objective 1. ML and TF risks are understood and, where appropriate, actions co-ordinated domestically to combat ML and TF Moderate 2. International co-operation delivers appropriate information, financial intelligence, and evidence, and facilitates action against criminals and their assets High 3. Supervisors appropriately supervise, monitor and regulate financial institutions and designated non-financial businesses and professions (DNFBPs) for compliance with AML/CFT requirements commensurate with their risks. Moderate 4. Financial institutions and DNFBPs adequately apply AML/CFT preventive measures commensurate with their risks, and report suspicious transactions. Moderate
  3. 3. Anti-money laundering and counter-terrorist financing measures in Sweden – Mutual Evaluation Report – April 2017 3 Immediate outcome of an effective system to combat money laundering (ML) and terrorist financing (TF) Extent to which Sweden has achieved this objective 5. Legal persons and arrangements are prevented from misuse for money laundering or terrorist financing, and information on their beneficial ownership is available to competent authorities without impediments Moderate 6. Financial intelligence and all other relevant information are appropriately used by competent authorities for money laundering and terrorist financing investigations. Moderate 7. Money laundering offences and activities are investigated and offenders are prosecuted and subject to effective, proportionate and dissuasive sanctions Substantial 8. Proceeds and instrumentalities of crime are confiscated. Substantial Ratings – Effectiveness (2/3)
  4. 4. Anti-money laundering and counter-terrorist financing measures in Sweden – Mutual Evaluation Report – April 2017 4 Immediate outcome of an effective system to combat money laundering (ML) and terrorist financing (TF) Extent to which Sweden has achieved this objective 9. Terrorist financing offences and activities are investigated and persons who finance terrorism are prosecuted and subject to effective, proportionate and dissuasive sanctions. Substantial 10. Terrorists, terrorist organisations and terrorist financiers are prevented from raising, moving and using funds, and from abusing the non-profit sector. Moderate 11. Persons and entities involved in the proliferation of weapons of mass destruction are prevented from raising, moving and using funds, consistent with the relevant United Nations Security Council Resolutions. Substantial Ratings – Effectiveness (3/3)
  5. 5. Anti-money laundering and counter-terrorist financing measures in Sweden – Mutual Evaluation Report – April 2017 5 Ratings – Effectiveness 25-Apr-2017 1 46 0 High Substantial Moderate Low
  6. 6. 21-Apr-17 6 Ratings – technical compliance (1/5) AML/CFT POLICIES AND COORDINATION 1. Assessing risks & applying a risk-based approach LarLarLarLar Largely compliant 2. National cooperation and coordination Pa Pa Pa Pa Partially compliant MONEY LAUNDERING AND CONFISCATION 3. Money laundering offence LarLarLarLar Largely compliant 4. Confiscation and provisional measures LarLarLarLar Largely compliant TERRORIST FINANCING AND FINANCING OF PROLIFERATION 5. Terrorist financing offence LarLarLarLar Largely compliant 6. Targeted financial sanctions related to terrorism & terrorist financing Pa Pa Pa Pa Partially compliant 7. Targeted financial sanctions related to proliferation Pa Pa Pa Pa Partially compliant 8. Non-profit organisations LarLarLarLar Largely compliant
  7. 7. 21-Apr-17 7 Ratings – technical compliance (2/5) PREVENTIVE MEASURES 9. Financial institution secrecy laws LarLarLarLar Largely compliant Customer due diligence and record keeping 10. Customer due diligence LarLarLarLar Largely compliant 11. Record keeping CoCoCoCo Compliant Additional measures for specific customers and activities 12. Politically exposed persons LarLarLarLar Largely compliant 13. Correspondent banking LarLarLarLar Largely compliant 14. Money or value transfer services CoCoCoCo Compliant 15. New technologies CoCoCoCo Compliant 16. Wire transfers Pa Pa Pa Pa Partially compliant
  8. 8. 21-Apr-17 8 Ratings – technical compliance (3/5) PREVENTIVE MEASURES (continued) Reliance, Controls and Financial Groups 17. Reliance on third parties Pa Pa Pa Pa Partially compliant 18. Internal controls and foreign branches and subsidiaries Pa Pa Pa Pa Partially compliant 19. Higher-risk countries LarLarLarLar Largely compliant Reporting of suspicious transactions 20. Reporting of suspicious transactions CoCoCoCo Compliant 21. Tipping-off and confidentiality CoCoCoCo Compliant Designated non-financial Businesses and Professions (DNFBPs) 22. DNFBPs: Customer due diligence LarLarLarLar Largely compliant 23. DNFBPs: Other measures LarLarLarLar Largely compliant
  9. 9. 21-Apr-17 9 Ratings – technical compliance (4/5) TRANSPARENCY AND BENEFICIAL OWNERSHIP OF LEGAL PERSONS AND ARRANGEMENTS 24. Transparency and beneficial ownership of legal persons Pa Pa Pa Pa Partially compliant 25. Transparency and beneficial ownership of legal arrangements Pa Pa Pa Pa Partially compliant POWERS AND RESPONSIBILITIES OF COMPETENT AUTHORITIES AND OTHER INSTITUTIONAL MEASURES Regulation and Supervision 26. Regulation and supervision of financial institutions Pa Pa Pa Pa Partially compliant 27. Powers of supervisors LarLarLarLar Largely compliant 28. Regulation and supervision of DNFBPs LarLarLarLar Largely compliant Operational and Law Enforcement 29. Financial intelligence units LarLarLarLar Largely compliant 30. Responsibilities of law enforcement and investigative authorities CoCoCoCo Compliant 31. Powers of law enforcement and investigative authorities LarLarLarLar Largely compliant 32. Cash couriers Pa Pa Pa Pa Partially compliant
  10. 10. 21-Apr-17 10 Ratings – technical compliance (5/5) POWERS AND RESPONSIBILITIES OF COMPETENT AUTHORITIES AND OTHER INSTITUTIONAL MEASURES (continued) General Requirements 33. Statistics LarLarLarLar Largely compliant 34. Guidance and feedback LarLarLarLar Largely compliant Sanctions 35. Sanctions LarLarLarLar Largely compliant INTERNATIONAL COOPERATION 36. International instruments CoCoCoCo Compliant 37. Mutual legal assistance LarLarLarLar Largely compliant 38. Mutual legal assistance: freezing and confiscation LarLarLarLar Largely compliant 39. Extradition CoCoCoCo Compliant 40. Other forms of international cooperation CoCoCoCo Compliant
  11. 11. Anti-money laundering and counter-terrorist financing measures in Sweden – Mutual Evaluation Report – April 2017 11 Ratings – technical compliance 25-Apr-17 9 21 10 0 Compliant Largely compliant Partially compliant Non compliant
  12. 12. Anti-money laundering and counter-terrorist financing measures in Sweden – Mutual Evaluation Report – April 2017 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. 1225-Apr-17
  13. 13. Anti-money laundering and counter-terrorist financing measures in Sweden – Mutual Evaluation Report – April 2017 Key findings 25-Apr-17 13  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.  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.
  14. 14. Anti-money laundering and counter-terrorist financing measures in Sweden – Mutual Evaluation Report – April 2017 Key findings  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 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. 1425-Apr-17
  15. 15. Anti-money laundering and counter-terrorist financing measures in Sweden – Mutual Evaluation Report – April 2017 Key findings 1525-Apr-17  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.
  16. 16. Anti-money laundering and counter-terrorist financing measures in Sweden – Mutual Evaluation Report – April 2017 Priority Actions for Sweden to strengthen its AML/CFT System 1625-Apr-17  Sweden should urgently introduce legal powers which will enable authorities to apply targeted financial sanctions relating to terrorism or proliferation, as a bridging measure; to EU internal terrorists; or on a national basis, together with a body or mechanism responsible for developing proposals for designation.  Sweden should establish a national mechanism to ensure adequate cooperation and coordination at policy level between ministries and operational agencies. Clear policies/instructions on division of labour; procedures for cross-agency case handling; and forums for sharing of risk information should be established, particularly between the FIU and LEAs and the supervisors.
  17. 17. Anti-money laundering and counter-terrorist financing measures in Sweden – Mutual Evaluation Report – April 2017 Priority Actions for Sweden to strengthen its AML/CFT System  Sweden should increase the access to and use of financial intelligence to identify complex cases of money laundering as well as professional money laundering, based on improved IT systems at the FIU and by developing its strategic analysis capacity.  Supervisors should improve their understanding of risks in their specific sector(s), supported by better tools and inter- agency communication, and use this understanding to implement a risk-based approach towards supervising the reporting entities. Sweden should increase the capacity of the FSA’s AML unit in order for it to undertake appropriate AML/CFT on-site and off-site supervisory actions, commensurate with the risk and size of Sweden’s financial sector. 1725-Apr-17
  18. 18. Anti-money laundering and counter-terrorist financing measures in Sweden – Mutual Evaluation Report – April 2017 Priority Actions for Sweden to strengthen its AML/CFT System  Sweden should take forward its plans to establish a central register of beneficial ownership (as required by the EU Fourth Anti-Money Laundering Directive). Sweden should also conduct a full risk assessment of the misuse of all the legal persons for ML/TF, and develop measures to mitigate the use of straw-men and corporate structures.  Authorities should build experience and establish precedents for prosecution and sentencing under the recently revised ML and TF offences. 1825-Apr-17

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