Meet The Members Europe – White collar crime: money laundering in Sweden – risk assessment and/or opportunity?

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As a businessperson, you often only know that an investigation is taking place when the investigator performs a raid and conducts a search of your premises, usually very early in the morning. Company representatives and/or employees are interrogated, and any electronic materials and other written documentation are confiscated. The investigation may have been ongoing for a long time before that, without you even knowing.

White-collar crime cases are often highly intricate, due to the amount of documentation involved and the complexity of the matters at hand.

At present, a lot is being done to combat white-collar crime, such as money laundering and fraud. Large-scale investigations involving many other member states within the EU and other jurisdictions are taking place. Currently, I’m involved in investigations and trials including countries such as the Netherlands, Germany, Lithuania, and countries outside the EU.

In the last ten years, Swedish authorities have taken several actions against organised crime, with the main goal of preventing money and companies from being used in criminal activities. The main reason for this is that criminals are more regularly using serious businesses and businesspeople to commit crimes. Often, these serious businesses and businesspeople are not aware that they are helping them.

“If you are thinking about setting up a franchise operation, you should protect your business idea as much as possible from the early planning stages.”

One of the main targets for criminal activities in Sweden now is our welfare system. Companies are used by criminals as tools to exploit the system and obtain funds, such as government support payments after the Covid-19 pandemic and electricity support due to price inflation.

The Swedish authorities have taken several actions to prevent these crimes from succeeding. Sweden has approved several agreements, such as the Joint Investigation Team (JIT) and agreements with previous tax havens, to enable international cooperation in cross-border criminal matters, as well as being members of several organisations. As a member of the EU, Sweden has approved all Money Laundering and Terrorist Financing Acts and has implemented related laws, even interpreting these laws more widely in Sweden.

The fight against money laundering relies on two types of regulations in Sweden: administrative and criminal justice regulations:

• Administrative regulations are critical: they aim to prevent financial and other business activities from being used for money laundering.

• The criminal legal framework is used to punish money laundering offences and hand out penalties for the financing of serious crimes.

In certain cases, the latter aims to prosecute people who carried out, assisted in, or enabled money laundering actions. This could be done intentionally or unintentionally by a person, and in some cases, there is no need for any money laundering to have occurred. Criminal liability can be proved if a person has acted in a way that could have enabled ‘black money’ to change hands, or they had been used as a ‘tool’ without questioning why.

“Criminals are more regularly using serious businesses and businesspeople to commit crimes. Often, these serious businesses and businesspeople are not aware that they are helping them.”

As in most countries, the targets most at risk for money laundering in Sweden are the banking and financial sectors, which also includes foreign exchange offices and the extensive unregistered trade in virtual currencies. Trade-in goods, as well as company founders, company brokers and trust managers are also considered high-risk branches of money laundering. Estate agents, gambling companies and, to some extent, the law firms that handle large amounts of money in a client’s account are also considered to be high-risk targets for money laundering.

The actions taken by the Swedish authorities to minimise the risk of money laundering include mandatory registration of the actual head of a company with the Swedish Companies Registration Office, which ensures that it’s not only the legal head whose name is public. Swedish authorities have also implemented and expanded reporting requirements, making it harder to exploit identities, and they have also extended the requirements for ‘Know Your Customer’ (KYC) reporting in many high-risk sectors.

Administrative sanctions against money laundering could be imposed with up to SEK 10 million for a company, whereas sanction fees also can be imposed. A well-known case is one where a Swedish bank received a warning and a sanction fee of kr4 billion. Company representatives who have failed to implement anti-money laundering rules risk fines or imprisonment of up to six years.

As a lawyer within this area, there is a need to inform all clients of the risks of being unintentionally involved in money laundering. Clients must consider what products and services they offer to their customers. They must also consider which geographical areas they are working in, what distribution channels they are using and also who their customers are. Compliance is an area considered to be difficult, time-consuming and/or extensive for many companies, and this is often the reason why this work is ignored in favour of core business activities.

Conclusion

All over the world, our clients risk a visit or an interrogation by the authorities. In all the jurisdictions we serve, these risks are similar, and we can find best practices through cooperation. Most of the money laundering cases in Sweden involve many other jurisdictions, not only within the EU.

To prevent the risk, we can be proactive by guiding our clients with our expertise and drawing on experience from colleagues within our network. In doing so, we can find common cases and business opportunities for our clients. If you and/or any of your clients have businesses in Sweden and are interested in preventing future problems, please contact me. You are also more than welcome to contact me if you have an ongoing case in Sweden and need assistance in any way.